Download - ICICI Prudential Life Insurance - HDFC securities Prudential Life...ICICI Prudential Life Insurance : Results Review 4QFY20 Covid-19 situation New policy sales were severely impacted

26 April 2020 Results Review 4QFY20

ICICI Prudential Life Insurance

Lower costs, higher protection drive beat! Despite a 1.7% lower than expected FY20 APE of Rs 73.8bn, IPRU’s reported FY20 VNB of Rs 16.1bn was 3.5% above expectation. Higher protection mix and lower expenses drove VNB margins higher 470bps YoY to 21.7%.

APE: Despite a strong performance in the group APE (+127.9/121.9% YoY/QoQ to Rs 2.5bn), total APE declined 19.6/3.3% YoY/QoQ to Rs 19.7bn. Retail APE declined 26.6/10.5% YoY/QoQ to Rs 17.2bn.

Protection: Indiv. protection at Rs 2.2bn (+6.6/3.3% YoY/QoQ, 11.0% share) continues to trend higher even in a difficult environment. Group protection APE grew by ~1.4x both on YoY/QoQ basis. Growth seems to be primarily driven by credit protect. Protection share increased to 17.8% (+720bps YoY).

Decline in ULIP sales (43.3/22.7% YoY/QoQ) continues to weigh on overall APE growth. Environment remains difficult for ULIP sales.

FY20 VNBM at 21.7% (+470bps YoY) was a result of 1) business mix (+470bps), 2) higher effective tax rate due to removal of DDT (-110bps), 3) assumption changes (10bps), and 4) lower expenses (+100bps).

Management indicated that protection business contributed to 59.7% of FY20 total VNB. Protection margins were lower by 2,340bps at 85.8% as within mix tilted towards lower margins limited pay variant.

Cost/TWRP improved significantly to 14.0% (-190/-260bps YoY/QoQ) for overall business, while cost/TWRP of savings business was at 8.5% (-10/-280bps YoY/QoQ). Management stated that focus on reducing variable costs in 4Q resulted in meaningful decline in costs.

AUM declined 4.6/11.0% YoY/QoQ to Rs 1.53tn with 40% equity in mix.

FY20 PAT was lower by 6.4% YoY at Rs 10.7bn.

Near-term outlook: Stock to time correct until clarity emerges on new insurance sales in FY21E.

We like IPRU’s re-engineered business model which is focused on a more diversified product mix along with an increased protection share. We expect VNB to grow at FY19-22E CAGR of 2.8%. We however remain wary of the current Covid-19 situation and believe that outlook for FY21E remains hazy. Lower than expected growth in FY21E may delay goal of doubling VNB by FY23E. We rate IPRU a BUY with a TP of Rs 460 (Mar-21E EV + 21.1x Mar-22E VNB).

Financial Summary

(Rs mn) 4Q

FY20 4Q

FY19 YoY (%)

3Q FY20

QoQ (%)

FY18 FY19 FY20 FY21E FY22E

NBP 42.1 40.9 2.9 30.4 38.6 92.1 103.6 104.7 102.1 115.0

APE 19.7 24.6 -19.6 20.4 -3.1 77.9 78.0 73.8 62.9 71.1

VNB NA NA NM NA NM 12.9 13.3 16.1 12.1 14.4

VNB Margin (%) # 21.7 17.0 467bps 21.0 0bps 16.5 17.0 21.7 19.3 20.3

EV

187.9 216.2 230.3 250.3 276.6

P/EV (x)

2.6 2.2 2.1 1.9 1.7

P/VNB (x)

25.0 22.2 16.6 20.8 16.1 # Refers are FYTD margins Source: Company, HSIE Research

BUY CMP (as on 24 Apr 2020) Rs 337

Target Price Rs 460

NIFTY 9,154 KEY CHANGES

OLD NEW

Rating BUY BUY

Price Target Rs 415 Rs 460

VNB % FY21E FY22E

16.6% 16.6%

KEY STOCK DATA

Bloomberg code IPRU IN

No. of Shares (mn) 1,436

MCap (Rs bn) / ($ mn) 483/6,329

6m avg traded value (Rs mn) 1,328

52 Week high / low Rs 538/222

STOCK PERFORMANCE (%)

3M 6M 12M

Absolute (%) (35.3) (29.8) (7.3)

Relative (%) (10.6) (10.1) 12.4

SHAREHOLDING PATTERN (%)

Dec-19 Mar-20

Promoters 74.98 74.98

FIs & Local MFs 5.52 5.53

FPIs 13.30 13.34

Public & Others 6.20 6.14

Pledged Shares 0.00 0.00

Source : BSE

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

HSIE Research is also available on Bloomberg ERH HDF <GO> & Thomson Reuters

ICICI Prudential Life Insurance : Results Review 4QFY20

Covid-19 situation New policy sales were severely impacted in Mar-20 as the country entered lock-

down. Sales reduced to a trickle in the last two weeks of the month. During this lock-down situation IPRU has revamped business outreach and

underwriting practices. IPRU is now using digital sales methods such as video calling, chat bots, tele-medicals etc to drive customer sales and servicing.

Additionally the company through negotiations with its reinsurers has also increased the limit of maximum sum assured that can be underwritten without physical medical.

Company believes strong digital capabilities will ensure that frauds are kept under check despite higher tele-medical based insurance.

The company has obtained permission for use of digital KYC through aadhaar. Management stated that the so far in Apr-20, IPRU is seeing growth in retail

protection, while co targets small gains in PAR and NPAR products over 1QFY21. Management maintained that ULIP sales will continue to remain challenged in the short to medium term.

Management also mentioned that enquiries for retail and group term products have increased significantly and believes that protection sales will benefit in this environment.

IPRU is also allowing base term insurance on the basis of tele-medicals, with option to customers to increase cover post medicals after lock-down.

The company is now focused on training channels especially distributors on digitally selling insurance products.

In this uncertain environment IPRU plans to convert costs to variable. The company has cut capex plans, implemented a hiring freeze, and is reducing fixed costs wherever possible.

Of the 723 Covid-19 deaths so far only two are IPRU policy holders and have filed for claims. The company is fairly confident about solvency and its underwriting practices even in these stressful times.

In the last 10 days of Mar-20, client engagement through chat bots increased by 42%, Whatsapp by 61% and mobile login by 94%. The company is using the current situation to enhance digital capabilities.

We believe that forecasting insurance sales remains challenging in this environment as we are not sure of when business will return to normal. Given that insurance is a push product the sales process traditionally has required a lot of face to face interaction. We remain cautious on the success of digital sales methods.

Business update Despite it being fairly obvious that FY21E will be a challenging year, the

management retained its guidance of doubling VNB by FY23E. Management believes it has sufficient levers to ensure higher margins despite the

near term sales contraction. Persistency was negative on a YoY basis for most buckets. Lower equity prices

are also resulting in lower surrender and helping persistency. So far persistency has been fine, but we remain watchful of the same. We are building in a slight negative variance in FY21E.

Investment book is pristine with no NPAs and no default events. The company has successfully avoided in investing in the recently defaulting companies.

IPRU is now using digital sales methods such as video calling, chat bots, tele-medicals etc to drive customer sales and servicing.

In Apr-20, IPRU is seeing growth in retail protection, while co targets small gains in PAR and NPAR products over 1QFY21.

Management maintained that ULIP sales will continue to remain challenged in the short to medium term.

IPRU plans to convert costs to variable. The company has cut capex plans, implemented a hiring freeze, and is reducing fixed costs wherever possible.

We remain cautious on the success of digital sales methods.

Page | 2


According to the company, it has not invested in a single defaulting security over the last 20 years. Currently 94% of fixed income assets are invested in govt. securities and AAA rated paper. Only 1% of fixed income book is in A+ and below investment grade papers.

Policy holder liabilities comprise NPAR 0.4%, ULIP 68%, Ulip 13% and NPAR protection 19.6%.

IPRU has increased pricing for protection as reinsurance rates have increased. IPRU has re-filed products with revised pricing. New pricing is at levels that do not dilute margins.

Given the near term challenges IPRU will not be paying a final dividend for FY20. The company has also cut its dividend policy to payment of 30% (-1,000bps) of PAT as dividend.

We expect 1QFY21E VNB margins to be under significant pressure given near term slowdown in sales.

4Q renewal premium grew -4.1/23.1 YoY/QoQ to Rs 64.3bn. FY20 renewal premium declined 1.4% YoY to Rs 209.4bn, as new policy sales growth was weak in FY19. We remain concerned about weak renewal premium growth.

4Q channel mix (APE): Banca/agency/direct/CA/group was at 44.3/21.7/13.0/8.2/12.8%. Banca contribution declined largely on back of reduction in ULIP sales.

Embedded Value and VNB EV for FY20 was negatively hit by Rs 2.25bn on account of operating assumption

change. Higher effective tax rate damaged EV by Rs 5.5bn, while lower than expected expenses helped by ~Rs 3.3bn. The change in DDT as per Finance Act, 2020 has resulted in higher effective tax rates for insurance companies.

EV was also negatively impacted negative economic variance/assumption change of Rs 14.8bn as despite lower interest rates, ~25% of shareholders funds are invested in equities, which suffered large MTM losses in Mar-20. Negative equity returns are the biggest contributors to negative economic variance.

In addition to the 25% of shareholders funds invested in equities, ULIP/PAR have ~60/25% exposure to equities. There is no exposure of NPAR funds to equities.

The company reported a FY20 RoEV of 15.2% (-500bps YoY). FY20 VNBM at 21.7% (+470bps YoY) was a result of 1) business mix (+470bps), 2)

higher effective tax rate (-110bps), 3) assumption changes (10bps), and 4) lower expenses (+100bps). Negative variance on account of higher effective tax rate is a result of removal of dividend distribution tax.

VNB Margin improved 270bps YoY to 10.3% for savings business. This was achieved with costs reduction for both fixed (-6.4% YoY) and variable (-16.4% YoY).

Future margin levers: Higher share of Protection, improvement in persistency and cost efficiency would drive further improvement in margins and will also increase EV.

Despite it being fairly obvious that FY21E will be a challenging year, the management retained its guidance of doubling VNB by FY23E.

IPRU has increased protection pricing as reinsurance rates have increased. IPRU has re-filed products with revised pricing. New pricing is at levels that do not dilute margins.

The company has also cut its dividend policy to payment of 30% (-1000bps) of PAT as dividend.

Negative equity returns are the biggest contributors to negative economic variance of Rs 14.8bn.


Page | 3


Five Quarters at a Glance (Rs Bn) 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 YOY (%) QoQ (%)

Premium earned 101.6 63.3 81.9 82.6 106.5 4.8 28.8

Premium on re-insurance 1.1 1.2 1.3 1.3 1.7 59.3 29.3 Net premium earned 100.6 62.1 80.7 81.3 104.8 4.2 28.8

Investment income 58.4 20.9 -0.6 47.4 -189.0 -423.7 -498.4

Other income 0.3 0.2 0.2 0.2 0.2 -29.0 -4.3

Total income 159.3 83.2 80.3 129.0 -84.0 -152.8 -165.1

Commission paid 5.1 2.7 4.0 4.3 4.4 -13.0 3.5

Expenses 9.6 8.1 9.3 9.5 9.2 -4.2 -3.1

Tax on policyholder funds 0.3 0.3 0.3 0.2 0.6 128.0 200.0 Claim/benefits paid 44.9 36.5 41.4 53.9 62.0 38.1 15.1

Change in actuarial liability 96.6 32.9 22.4 58.1 -161.9 -267.6 -378.7

Total expenses 156.5 80.3 77.2 125.9 -85.7 -154.8 -168.1

Profit before tax 2.8 2.9 3.1 3.0 1.7 -38.1 -43.4

Tax 0.2 0.0 0.0 0.0 -0.1 -141.2 -450.0

Profit after tax 2.6 2.9 3.0 3.0 1.8 -31.4 -40.7 Source: Company, HSIE Research Business metrics 4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 YOY (%) QoQ (%) New Business Premium (Rs bn)

40.9 22.9 29.5 30.4 42.1 2.9 38.6

Product mix on APE basis (Rs bn)

Individual Savings 21.4 12.3 15.7 17.1 15.0 -29.8 -12.2

PAR 2.3 1.4 2.2 2.5 3.3* 43.4 31.3

Non-PAR 0.3 0.4 0.8 0.8 1.1* 282.8 33.2

ULIP 18.9 10.5 12.8 13.8 10.7 -43.3 -22.7 Group Savings 0.5 0.2 0.5 0.6 1.2 119.4 106.1

Protection 2.6 2.1 2.8 2.7 3.5 34.9 31.8

Individual Protection 2.0 1.4 2.0 2.1 2.2 6.6 3.3

Group Protection 0.6 0.8 0.8 0.6 1.3 136.0 138.1

Total 24.6 14.7 19.0 20.4 19.7 -19.7 -3.1

Product mix - APE Basis (%)

Individual Savings 87.2 83.8 82.6 84.1 76.2 -1100bps -790bps

PAR 9.3 9.7 11.5 12.3 16.6 730bps 440bps Non-PAR 1.1 3.0 3.9 4.0 5.4 430bps 150bps

ULIP 76.7 71.2 67.2 67.8 54.1 -2260bps -1370bps

Group Savings 2.2 1.6 2.5 2.8 6.0 380bps 320bps

Protection 10.6 14.6 14.9 13.1 17.8 720bps 470bps

Individual Protection 8.3 9.4 10.7 10.3 11.0 270bps 70bps

Group Protection 2.3 5.2 4.2 2.8 6.8 450bps 400bps

Total 100 100 100 100 100 - - Source: Company, HSIE Research; * estimated

PAT growth was sub-dued largely on account of negative investment income.

M2M losses in equities led to losses in investment income.

Management highlighted that the industry is witnessing contraction in demand for ULIPs and that the environment will remain challenged in the medium term.

Share of protection was at 17.8%. Increase in protection share was largely led by group protection.

Protection continued to do well despite a difficult sales environment in Mar-20.

Page | 4


4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 YOY (%) QoQ (%) APE (Rs bn) Retail APE 23.5 13.7 17.7 19.2 17.2 (26.6) (10.5) Group APE 1.1 1.0 1.3 1.1 2.5 127.9 121.9 Total APE 24.6 14.7 19.0 20.4 19.7 (19.7) (3.1) VNB Margin (%)# 17.0 21.0 21.0 21.0 21.7 500bps 1bps Channel Mix-APE basis (%) Bancassurance 54.2 52.4 59.2 48.0 44.3 -990bps -370bps Agency 21.9 21.2 22.8 19.2 21.7 -30bps 250bps Direct 12.8 12.8 11.1 13.5 13.0 30bps -50bps Corporate Agents 6.5 6.8 4.8 9.5 8.2 170bps -140bps Group 4.6 6.8 2.2 9.8 12.8 820bps 300bps Source: Company, HSIE Research; #Refers to FYTD margins

4QFY19 1QFY20 2QFY20 3QFY20 4QFY20 YOY (%) QoQ (%) Cost/TWRP*(overall business) (%)

15.9 17.0 16.3 16.6 14.0 -190bps -260bps

Cost/TWRP (savings business) (%)

8.6 11.3 10.8 11.3 8.5 -10bps -280bps

Solvency Ratio (%) 215.0 216.7 211.0 207.0 194.1 -2090bps -1290bps AUM (Rs bn) 1,604 1,640 1,655 1,720 1,530 (4.6) (11.0) Equity (%) 48 48 47 47 40 -800bps -700bps Debt (%) 52 52 53 53 60 800bps 700bps Persistency ex. single premium and group (%)

13th month persistency 86.1 84.4 83.6 83.1 83.2 -290bps 10bps 25th month persistency 76.3 75.7 75.0 74.4 75.1 -120bps 70bps 37th month persistency 69.8 69.8 69.1 68.3 66.7 -310bps -160bps 49th month persistency 63.9 64.2 63.7 64.3 64.6 70bps 30bps 61st month persistency 56.4 57.3 57.2 56.3 56.0 -40bps -30bps Source: Company, HSIE Research*Refers to Total weighted received premium Group APE mix:

FY18 FY19 FY20 YOY (%/bps)

Group APE (Rs bn)

- Savings NA 1.3 2.5 94.5 - Term NA 1.3 1.1 -11.7 - Credit life NA 1.6 2.4 49.7 Total NA 4.1 6.0 44.4 Group APE share (%)

Savings NA 30.8 41.5 1100bps Term NA 31.1 19.0 -1200bps Credit life NA 38.1 39.5 100bps Total NA 100.0 100.0

Source: Company, HSIE Research

Credit protect is driving group business growth.

Reduction in cost ratios of savings business continues and overall costs ratios declined .

Sales through Bancassurance witness decline of 990bps YoY as sales of ULIP at ICICI Bank channel declined.

Page | 5


VNB breakup FY18 FY19 FY20 YOY (%)/bps) VNB (Rs bn) 12.9 13.3 16.1 20.9 Protection 5.6 7.9 9.6 21.4 Savings 7.3 5.4 6.5 20.0 -Linked NA 4.2 4.2 0.7 -Non-linked NA 1.2 2.3 86.1 VNB Margin (%) 16.5 17.0 21.7 500bps -Protection (%) 124.4 109.3 85.8 -2300bps -Savings (%) 10.0 7.6 10.3 300bps Source: Company, HSIE Research Estimate Change

Rs bn FY21E FY22E

Old New Change Old New Change

APE 68.4 65.8 -3.9 77.3 75.0 -3.0 VNB 13.2 15.4 16.6 15.7 18.3 16.6 VNB Margin 19.3% 23.4% 410.0bps 20.3% 24.4% 410.0bps EV 261.5 259.4 -0.8 288.5 295.5 2.4 Source: Company, HSIE Research APE trend


Product Mix On APE (%)


17.0

18.7

20.1

22.1

14.0

19.9

19.6

24.6

14.7

19.0

20.4

19.7

112.

2

3.3

8.7

2.1

(18.

1) 6.1

(2.1

)

11.0

5.3

(4.3

)

3.9

(19.

6)

(40.0)

(20.0)

-

20.0

40.0

60.0

80.0

100.0

120.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

1QFY

18

2QFY

18

3QFY

18

4QFY

18

1QFY

19

2QFY

19

3QFY

19

4QFY

19

1QFY

20

2QFY

20

3QFY

20

4QFY

20

Total APE Growth - RHSRs bn %

84 84 80 71 67 6854

10 10 9 10 12 12

17

4 4 9 15 15 13 18

1 1 1 3 4 4 5 1 1 2 2 2 3 6

0%10%20%30%40%50%60%70%80%90%

100%

FY17

FY18

FY19

1QFY

20

2QFY

20

3QFY

20

4QFY

20

ULIP PAR Protection Non-PAR Group

Led by higher share of protection and lower costs on savings business, VNB margin increased to 21.7% (+467 bps vs. FY19) led by increase of protection in the mix.

We have fine tuned our APE growth and EV estimates.

Our VNB estimates are revised upwards as we expect share of protection to increase and further cost reductions in the savings business.

Despite a strong performance in the group APE, total APE declined 19.6/3.3% YoY/QoQ to Rs 19.7bn.

Total protection share increased to 17.8% in 4QFY20.

Page | 6


AUM Mix


Channel Mix On APE


VNB Trend


47 47 48 48 47 47 40

53 53 52 52 53 53 60

0%

20%

40%

60%

80%

100%

FY17

FY18

FY19

1QFY

20

2QFY

20

3QFY

20

4QFY

20

Equity Debt

52 56 52 59 48 44

23 25 22 21 23 19

12 14 12 13 11

14

6 6 6 7 5 10

2 3 5 7 2 10

0%

20%

40%

60%

80%

100%

FY18

FY19

1QFY

20

2QFY

20

3QFY

20

4QFY

20

Group Corporate Agents Direct Agency Bancassurance

12.9

13.3

3.1

7.1

11.4

16.1

16.5

17.0

21.0

21.0

21.0

21.7

0.0

5.0

10.0

15.0

20.0

25.0

0.02.04.06.08.0

10.012.014.016.018.0

FY18

FY19

1QFY

20

1HFY

20

9MFY

20

FY20

VNB - LHS VNB Margin (%) - RHS

Equity AUM took a hit on account of steep decline in equity markets.

Sales through Bancassurance witness decline of 990bps YoY as sales of ULIP at ICICI Bank channel declined.

FY20 VNBM at 21.7% (+470bps YoY) was a result of 1) business mix (+470bps), 2) higher effective tax rate (-110bps), 3) assumption changes (10bps), and 4) lower expenses (+100bps).


Page | 7


Persistency Trend (ex-single premium)


RoEV stack-up

Source: Company, HSIE Research Embedded Value movement Particulars (Rs mn) FY18 FY19 FY20 FY21E FY22E

Opening IEV 161,840 187,880 216,220 230,300 259,404

Value of new business 12,860 13,280 16,050 15,392 18,297

Expected return on existing business 13,720 15,840 17,250 18,885 20,752

Change in operating assumptions 7,640 4,200 -2,250 -1,500 -200

Other operating variance 0 0 0 0 0

IEV operating earnings 36,800 37,990 32,890 31,276 39,349

Economic variances 1,120 -1,220 -14,760 0 0

Total IEV earnings 37,920 36,770 18,130 31,276 39,349

Capital contributions / dividend payouts -11,880 -8,430 -4,050 -2,172 -3,237

Closing IEV 187,880 216,220 230,300 259,404 295,516 Source: Company, HSIE Research

86.1

76.3

69.8

63.9

56.4

84.4

75.7

69.8

64.2

57.3

83.6

75.0

69.1

63.7

57.2

83.1

74.4

68.3

64.3

56.3

83.2

75.1

66.7

64.6

56.0

0.0

20.0

40.0

60.0

80.0

100.0

13th month 25th month 37th month 49th month 61st month

4QFY19 1QFY20 2QFY20 3QFY20 4QFY20%

7.9 7.1 7.4 6.7 7.1

8.5 8.4 8.0 8.2 8.0

1.6 2.5 0.9

-0.7

0.2

4.7 2.2

-0.7 -0.1

0.00.0

0.7

-0.6

-6.8

0.0 0.0

-10

-5

0

5

10

15

20

25

FY18 FY19 FY20 FY21E FY22E

Economic variances Other operating varianceChange in operating assumptions Variance in operating experience

Persistency trended a little lower on YoY basis, but was stable on a QoQ basis.

Negative economic variance hit total RoEV by -6.8%. Negative economic variance was mainly on account of equity investments in shareholders funds.

EV for FY20 was negatively hit by Rs 2.25bn on account of operating assumption change. Higher effective tax rate damaged EV by Rs 5.5bn, while lower expected expenses helped by ~Rs 3.3bn.

Page | 8


Sensitivity Analysis

Sensitivity Analysis FY18

% change in FY19

% change in FY20

% change in

VNB EV VNB EV VNB EV

Increase by 100bps in the reference rates (4.9) (2.1) (4.3) (2.0) (2.4) (2.5) Decrease by 100bps in the reference rates 5.2 2.2 4.4 2.0 2.2 2.6 10% increase in the discontinuance rates (8.6) (1.3) (8.5) (1.3) (5.0) (1.1) 10% decrease in the discontinuance rates 9.1 1.4 8.9 1.4 5.1 1.1 10% increase in mortality/ morbidity rates (5.4) (1.0) (9.4) (1.4) (9.5) (1.6) 10% decrease in mortality/ morbidity rates 5.5 1.0 9.4 1.4 9.6 1.7 10% increase in acquisition expenses (9.2) Nil (13.0) Nil (11.6) Nil 10% decrease in acquisition expenses 9.2 Nil 13.0 Nil 11.6 Nil 10% increase in maintenance expenses (3.5) (1.0) (3.6) (0.9) (3.0) (0.8) 10% decrease in maintenance expenses 3.5 1.0 3.6 0.9 3.0 0.9 Tax rates increased to 25% (7.9) (4.6) (7.5) (4.0) (11.4) (5.8) 10% increase in equity values NA NA NA NA 0.7 1.8 10% decrease in equity values NA NA NA NA (0.7) (1.8) Source: Company, HSIE Research

Industry NBP data

Particulars Individual (Rs bn) Group (Rs bn) Total (Rs bn)

FY17 FY18 FY19 FY20 YOY (%)



Aditya Birla Sun Life 9.6 11.5 22.0 18.0 -18.1 15.7 15.1 21.9 18.5 -15.3 25.3 26.6 43.9 36.6 -16.7 Bajaj Allianz Life 10.7 14.6 18.0 20.0 11.0 22.2 28.4 31.2 31.8 1.9 32.9 42.9 49.2 51.8 5.2 Bharti Axa Life 4.0 4.7 6.4 6.3 -1.5 2.1 2.6 2.7 1.9 -27.2 6.1 7.3 9.1 8.3 -9.0 DHFL Pramerica Life 2.2 3.6 3.2 1.7 -47.4 6.6 10.9 9.1 3.5 -61.4 8.8 14.5 12.2 5.1 -57.8 HDFC Standard Life 42.0 59.4 76.4 85.2 11.5 45.0 54.0 73.3 88.7 21.1 87.0 113.4 149.7 174.0 16.2

ICICI Prudential Life 69.8 84.0 81.4 78.7 -3.3 8.9 7.2 21.1 44.7 111.8 78.6 91.3 102.5 123.5 20.4

Kotak Mahindra Life 14.4 19.7 21.3 24.0 12.5 14.1 14.5 18.5 27.1 46.7 28.5 34.3 39.8 51.1 28.4 Max Life 33.1 39.8 47.5 51.3 8.1 3.6 3.6 4.1 4.5 9.4 36.7 43.5 51.6 55.8 8.2 SBI Life 64.7 84.1 96.4 112.4 16.7 36.8 25.6 41.6 53.5 28.7 101.5 109.7 137.9 165.9 20.3 Tata AIA Life 10.5 14.0 23.5 30.8 31.0 0.8 0.9 1.3 1.6 28.5 11.3 14.9 24.8 32.4 30.9 Private players Total 321 404 471 503 6.8 186 190 259 306 18.1 507 593 730 809 10.8 LIC 456 517 510 512 0.4 788 828 912 1,267 39.0 1,244 1,346 1,422 1,780 25.2 Industry total* 777 921 981 1,015 3.5 974 1,018 1,171 1,574 34.4 1,751 1,939 2,152 2,589 20.3

Source: IRDAI data, HSIE Research * Total will not add up since we have excluded smaller sized private players

Market share on NBP basis (%)

Particulars Individual Group

FY17 FY18 FY19 FY20 YOY (bps) FY17 FY18 FY19 FY20 YOY (bps) Aditya Birla Sun Life 3.0 2.9 4.7 3.6 -109 8.5 8.0 8.4 6.1 -238 Bajaj Allianz Life 3.3 3.6 3.8 4.0 15 12.0 14.9 12.0 10.4 -165 Bharti Axa Life 1.3 1.2 1.4 1.3 -11 1.1 1.4 1.0 0.6 -39 DHFL Pramerica Life 0.7 0.9 0.7 0.3 -34 3.5 5.7 3.5 1.1 -235 HDFC Standard Life 13.1 14.7 16.2 17.0 71 24.2 28.5 28.2 29.0 73 ICICI Prudential Life 21.7 20.8 17.3 15.7 -163 4.8 3.8 8.1 14.6 647 Kotak Mahindra Life 4.5 4.9 4.5 4.8 24 7.6 7.7 7.1 8.8 172 Max Life 10.3 9.9 10.1 10.2 12 1.9 1.9 1.6 1.5 -12 SBI Life 20.2 20.8 20.5 22.4 189 19.8 13.5 16.0 17.5 144 Tata AIA Life 3.3 3.5 5.0 6.1 113 0.4 0.5 0.5 0.5 4 Private players* 41.3 43.8 48.0 49.5 154 19.1 18.6 22.2 19.5 -269 LIC 58.7 56.2 52.0 50.5 -154 80.9 81.4 77.8 80.5 269 Industry 100 100 100 100 0 100 100 100 100 0

Source: IRDAI data, HSIE Research * Total will not add up since we have excluded smaller sized private players

VNB is most sensitive to rise in acquision expenses tax rates.

Page | 9


Valuation Comps

Unit

Bloomberg Ticker

IPRU MAXF SBILIFE HDFCLIFE

Rating

BUY

ADD

BUY

Not Rated

Current market price Rs

337

420

679

453

Market Capitalisation Rs bn

483

144

679

912

Target price Rs

460

442

1,056

500*

Upside/(Downside) %

36.7

5.2

54.0

10.3

Profitablity

FY20 FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E FY20E FY21E FY22E

VNB Margin % 21.7 23.4 24.4 21.3 19.3 20.2 20.5 19.6 20.5 26.2 25.5 26.4

Total RoEV % 8.4 13.6 15.2 17.9 13.3 16.9 17.8 13.5 15.6 15.9 16.0 16.3

Operating RoEV % 15.2 13.6 15.2 19.0 13.3 16.9 15.7 13.5 15.6 14.8 16.0 16.3

Non-operating RoEV % -6.8 0.0 0.0 -1.1 0.0 0.0 2.1 0.0 0.0 1.1 0.0 0.0

RoE % 15.5 18.4 17.8 20.2 20.4 19.6 16.9 15.1 14.3 24.5 20.8 20.3

Valuation at CMP


P/EV x 2.1 1.9 1.6 1.6 1.5 1.4 2.5 2.2 1.9 4.4 3.8 3.3

P/EVOP x 14.7 15.4 12.3 10.4 13.5 9.8 18.3 18.2 14.0 33.7 27.4 23.6

Implied P/VNB x 16.6 16.4 12.2 9.9 10.5 8.3 19.4 20.1 15.0 37.4 41.6 34.0

Implied P/VIF x 3.2 2.9 2.6 3.0 2.7 2.4 4.0 3.6 3.2 6.7 6.0 5.3

P/B x 6.4 5.5 4.8 6.7 6.0 5.4 7.9 7.0 6.2 13.6 11.7 10.2

P/E x 43.4 32.2 28.8 35.3 32.6 30.5 50.0 49.2 46.1 60.2 60.6 53.6

P/AUM x 0.5 0.3 0.2 0.2 0.2 0.2 0.4 0.3 0.3 0.6 0.5 0.5

Valuation at TP/FV


P/EV x 2.9 2.5 2.2 1.7 1.6 1.4 3.8 3.4 2.9 4.8 4.2 3.7

P/EVOP x 20.1 21.1 16.8 10.9 14.1 10.3 28.2 28.1 21.6 37.1 30.2 26.0

Implied P/VNB x 27.7 27.9 21.9 11.1 12.0 9.6 35.5 38.4 29.9 42.3 47.1 38.7

Implied P/VIF x 4.3 4.0 3.6 3.1 2.8 2.6 6.1 5.5 4.9 7.4 6.6 5.8

P/B x 8.8 7.5 6.6 7.0 6.3 5.7 12.2 10.8 9.6 15.0 12.9 11.2

P/E x 59.3 44.0 39.4 37.1 34.2 32.1 77.0 75.8 71.0 66.4 66.8 59.1

P/AUM x 0.6 0.4 0.3 0.2 0.2 0.2 0.6 0.5 0.4 0.7 0.6 0.5 Source: Company financials and disclosures, HSIE Research


Per Share data


EV Rs 160 181 206 267 283 310 276 311 357 103 118 135

EVOP Rs 23 22 27 46 36 48 37 37 48 13 17 19

VNB Rs 11 11 13 23 19 21 23 20 25 10 8 10

VIF Rs 106 115 128 182 200 221 171 190 214 67 76 86

Book Value Rs 52 61 70 63 70 78 86 97 109 33 39 44

Earnings Rs 8 10 12 12 13 14 14 14 15 8 7 8

AUM Rs 728 1,240 1,432 1,989 2,288 2,609 1,679 1,984 2,325 741 862 1,004

ANW Rs 55 65 78 82 79 85 101 117 139 35 41 48

Page | 10


Key parameters


APE Rs bn 74 66 75 40 36 39 111 102 120 74 66 77

VNB Rs bn 16 15 18 9 7 8 23 20 25 19 17 20

Total EVOP Rs bn 18 31 39 17 13 18 37 37 48 29 33 39

Operating EVOP Rs bn 33 31 39 17 13 18 37 37 48 27 33 39

Non- operating EVOP Rs bn -15 0 0 -1 0 0 5 0 0 2 0 0

EV Rs bn 230 259 296 99 105 114 276 311 357 208 238 273

Net worth Rs bn 75 88 101 31 34 38 86 97 109 67 78 90

Net Profit Rs bn 11 15 17 6 6 7 14 14 15 15 15 17

AUM Rs bn 1,045 1,780 2,056 735 845 964 1,679 1,984 2,325 1,495 1,740 2,026

Growth YOY


APE % (5.4) (10.9) 14.0 0.2 (11.3) 9.2 14.8 (8.0) 17.1 22.9 (10.7) 15.5

VNB % 20.9 (4.1) 18.9 3.7 (19.6) 14.3 18.8 (12.1) 22.4 26.5 (13.1) 17.3

Total EVOP % (50.7) 72.5 25.8 3.2 (22.6) 34.3 4.6 0.2 30.0 (14.9) 14.5 16.1

Operating EVOP % (13.4) (4.9) 25.8 3.2 (22.6) 34.3 4.6 0.2 30.0 (11.5) 22.9 16.1

Non- operating EVOP % NM NM NM NM NM NM NM NM NM NM NM NM

EV % 6.5 12.6 13.9 10.5 6.0 9.2 16.8 12.6 14.7 13.9 14.2 14.6

Net worth % 9.7 16.3 14.8 11.8 11.3 10.6 14.9 13.2 12.4 18.9 15.8 15.4

Net Profit % (2.9) 34.6 11.7 5.6 8.3 6.7 2.3 1.7 6.7 18.9 (0.6) 13.0

AUM % (34.9) 70.3 15.5 17.0 15.0 14.0 19.0 18.2 17.2 19.1 16.4 16.5 Source: Company financials and disclosures, HSIE Research Operational Comps


APE mix FY17 FY18 FY19 FY20 FY17 FY18 FY19 9MFY

20 FY17 FY18 FY19

9MFY20

FY17 FY18 FY19 9MFY

20 Individual Rs bn 65.2 75.8 74.4 67.9 26.4 32.2 39.2 27.2 60.2 77.9 90.8 74.0 37.4 48.9 52.0 43.9 Group Rs bn 1.1 2.1 3.7 5.9 0.2 0.3 0.3 0.2 5.8 7.5 6.1 6.4 3.5 6.3 10.6 9.0 APE (Rs bn) Rs bn 66.3 77.9 78.0 73.8 26.6 32.5 39.5 27.4 66.0 85.4 96.9 80.4 40.9 55.2 62.6 53.0 YoY Growth % 30 18 0 (5) 26 22 22 20 35 29 13 22 13 35 13 32 CAGR 3 years %

15 4

23 NA

26 NA

20 NA

CAGR 5 years %

19 10

31 NA

25 NA

20 NA

Business mix- product wise

FY17 FY18 FY19 FY20 FY17 FY18 FY19 9MFY

20 FY17 FY18 FY19

9MFY20

FY17 FY18 FY19 9MFY

20

*Total

APE *Total

APE *Total

APE *Total

APE * Total

APE * Total

APE * Total

APE * Total

APE * Total

APE * Total

APE * Total

APE * Total

APE * Total

APE * Total

APE * Total

APE * Total

APE Individual % 98.4 97.3 95.3 92.0 97.0 96.0 96.0 94.0 89.5 92.5 93.7 92.0 89.3 88.4 83.1 83.0 PAR % 9.6 10.9 8.6 12.7 54.0 43.0 39.5 29.5 16.6 24.4 18.7 11.3 31.2 24.8 15.0 10.8 Non-PAR % 1.1 0.5 0.9 4.2 9.0 8.0 9.0 20.0 0.7 0.8 0.4 7.0 8.0 8.0 16.6 43.1 ULIP % 84.1 81.9 79.6 64.7 30.0 41.0 41.5 36.5 70.9 66.5 70.8 69.5 46.4 51.3 45.7 23.2 Protection % 3.6 4.0 6.2 10.4 4.0 4.0 6.0 8.0 1.2 0.7 3.8 4.2 3.6 4.4 5.8 5.8

Group % 1.6 2.7 4.7 8.0 3.0 4.0 4.0 6.0 10.5 7.5 6.3 8.0 10.7 11.6 16.9 17.0 Savings % 1.3 1.0 1.6 3.3 NA NA NA NA 5.5 2.8 3.3 4.2 6.5 4.7 6.0 6.1 Protection % 0.3 1.7 3.1 4.7 3.0 4.0 4.0 6.0 5.1 4.7 3.0 3.7 4.2 6.9 10.9 10.9

Total % 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0

Source: Company financials and disclosures, HSIE Research

Page | 11



Channel mix (Overall)

FY17 FY18 FY19 FY20 FY17 FY18 FY19 9MFY

20 FY17 FY18 FY19

9MFY20

FY17 FY18 FY19 9MFY

20

*Total

APE *Total

APE *Total

APE *Total

APE * Ind APE

* Ind APE

* Ind APE

* Ind APE

*NBP *NBP *NBP *NBP * Total

NBP * Total

NBP * Total

NBP * Total

NBP Bancassurance % 57.3 52.3 56 51 70.0 72.0 69.6 67.0 53.0 62.0 64.0 60.0 52.0 48.0 49.0 NA Agency % 23.8 25.4 22 21 29.0 27.0 29.8 32.0 22.0 25.0 21.0 19.0 32.0 33.0 26.0 NA Direct % 9.8 13.5 12 13 - - - - - - - - 7.0 10.0 16.0 NA Brokers and others

% 9.1 8.8 11 15 1.0 1.0 1.0 1.0 25.0 13.0 15.0 22.0 9.0 9.0 9.0 NA

Total % 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 101.0 100.0 100.0 100.0 NA

Source: Company financials and disclosures, HSIE Research

Banca channel partners


ICICIB and SCB AXIS, YES, LVB SBI, P&SB, SIB, SYB, ALB HDFCB, RBL, IDFCB, BFL

AUM FY17 FY18 FY19 FY20 FY17 FY18 FY19 9MFY

20 FY17 FY18 FY19

9MFY20

FY17 FY18 FY19 9MFY

20

AUM Rs bn

1,229 1,395 1,604 1,530 444 522 628 964 977 1,163 1,410 1,642 917 1,066 1,256 1,365

Equity % 46.8 47.0 48.0 40.0 24.0 22.0 22.0 22.0 23.2 23.0 23.0 24.0 41.0 39.0 38.0 37.0 Debt % 53.2 53.0 52.0 60.0 76.0 78.0 78.0 78.0 76.8 77.0 77.0 76.0 59.0 61.0 62.0 63.0

Linked % 71.5 69.9 NA NA 35.0 33.0 32.0 30.0 54.0 53.0 49.0 50.0 52.0 57.0 NA NA Non-linked % 28.5 30.1 NA NA 65.0 67.0 68.0 70.0 46.0 47.0 51.0 50.0 48.0 43.0 NA NA

Solvency ratio FY17 FY18 FY19 FY20 FY17 FY18 FY19

9MFY20

FY17 FY18 FY19 9MFY

20 FY17 FY18 FY19

9MFY20

Solvency % 281 252 215 194 309 275 242 220 204 206 213 230 192 192 188 195

Market Share FY17 FY18 FY19 FY20 FY17 FY18 FY19

9MFY20

FY17 FY18 FY19 9MFY

20 FY17 FY18 FY19

9MFY20

Individual NBP Private Market Share

% 21.7 20.8 17.3 15.8 10.3 9.9 10.1 9.5 20.2 20.8 20.5 23.6 13.1 14.7 16.2 17.0

Individual APE Private Market Share

% 22.3 20.9 17.6 17.0 9.2 9.0 9.6 9.0 20.7 21.8 22.3 24.4 12.7 13.3 12.5 14.3

VNB Margin FY17 FY18 FY19 FY20 FY17 FY18 FY19

9MFY20

FY17 FY18 FY19 9MFY

20 FY17 FY18 FY19

9MFY20

Margin % 10.1 16.5 17.0 21.7 18.2 20.2 21.7 21.0 15.7 18.4 19.8 20.5 22.3 23.2 24.6 26.6

Persistency FY17 FY18 FY19 FY20 FY17 FY18 FY19

9MFY20

FY17 FY18 FY19 9MFY

20 FY17 FY18 FY19

9MFY20

13th month % 85.7 87.8 87.4 85.3 80.0 80.0 83.0 85.0 81.1 83.0 85.1 82.5 80.9 87.0 87.2 89.7 25th month % 73.9 78.8 78.0 77.4 70.0 72.0 71.0 72.0 73.9 75.2 76.7 75.5 73.3 77.0 80.4 80.0 37th month % 66.8 68.9 71.3 69.0 60.0 62.0 64.0 63.0 67.4 70.0 71.4 68.9 63.9 71.0 72.0 73.4 49th month % 59.3 63.6 65.2 66.4 55.0 57.0 58.0 60.0 62.5 63.9 66.4 64.6 58.3 62.0 67.7 67.7 61th month % 56.2 54.8 57.6 57.4 53.0 53.0 53.0 51.0 67.2 58.4 57.2 61.1 56.8 51.0 52.3 54.7

Page | 12


Performance metrics, growth and ratios Particulars FY18 FY19 FY20 FY21E FY22E Performance metrics (Rs mn)

NBP 92,118 103,644 104,692 104,282 118,881 APE 77,920 77,990 73,810 65,777 74,986 VNB 12,860 13,280 16,050 15,392 18,297 EV 187,880 216,220 230,300 259,404 295,516 EVOP 36,800 37,990 32,890 31,276 39,349 Rs/share

EPS 11.3 8.0 7.8 10.4 11.7 BV 45.8 47.9 52.5 61.1 70.1 DPS 2.8 1.3 0.7 1.3 1.9 Growth (%)

Premium growth 41.1 14.1 7.5 7.7 6.9 Total income growth 2.8 8.3 (47.0) 121.5 7.3 Commissions growth 126.3 10.5 2.2 (4.4) 10.8 Opex growth 7.5 28.3 9.3 10.5 6.9 PAT growth (1.8) (29.3) (2.9) 34.6 11.7 Performance metrics growth (%)

NBP 17.1 12.5 1.0 (0.4) 14.0 APE 17.6 0.1 (5.4) (10.9) 14.0 VNB 93.1 3.3 20.9 (4.1) 18.9 EV 16.1 15.1 6.5 12.6 13.9

EVOP 60.3 3.2 (13.4) (4.9) 25.8 EPS (5.0) (29.3) (2.9) 34.6 11.7 BV 7.2 4.5 9.7 16.3 14.8 DPS (11.6) (52.9) (50.0) 89.1 49.0 Expense ratios (%)

Commissions/premium 5.2 5.1 4.8 4.3 4.4 Opex/premium 7.6 8.5 8.7 8.9 8.9 Total expenses/premium 12.8 13.6 13.5 13.2 13.3 Effeciency ratios (%)

RoAA 1.3 0.8 0.7 0.9 0.9 RoE 27.9 17.1 15.5 18.4 17.8 ROEV return 23.4 19.6 8.4 13.6 15.2 Operating RoEV 22.7 20.2 15.2 13.6 15.2 Non-operating RoEV 0.7 (0.6) (6.8) - - Source: Company, HSIE Research

Page | 13


Financials Profit and Loss Account (Rs mn) FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E

Policyholder Account

Total premium earned 151,604 189,987 221,552 268,107 305,783 328,790 353,993 378,419

Income from investments and other income 187,424 12,292 150,360 113,315 102,948 (124,365) 123,029 137,862

Transfer from shareholders account 415 - 18 753 5,272 14,970 8,982 5,389

Total income 339,443 202,279 371,930 382,174 414,003 219,395 486,004 521,670

Commission 5,532 6,200 7,589 14,033 15,513 15,860 15,157 16,789

Operating expenses 16,520 18,883 23,572 20,299 26,053 28,469 31,454 33,624

Provisions (5) 52 61 31 (1) 19 20 20

Total expenses 22,047 25,135 31,222 34,363 41,565 44,348 46,630 50,433

Benefits paid 122,574 124,274 149,979 172,808 142,591 193,766 151,027 177,824

Change in valuation of liabilities 179,561 35,155 174,976 154,475 210,030 (50,569) 255,212 263,237

Total 302,135 159,429 324,954 327,283 352,621 143,197 406,239 441,062

Surplus 15,261 17,716 15,754 20,529 19,817 31,850 33,135 30,175

Tax 504 704 788 1,201 1,132 1,314 1,971 1,691

Net surplus 14,757 17,012 14,966 19,328 18,685 30,536 31,164 28,484

Transfer to shareholders account 11,386 12,076 11,315 10,892 10,770 19,887 19,196 16,469

Shareholders account (Rs mn)

Transfer from policyholders' a/c 11,386 12,076 11,315 10,892 10,770 19,887 19,196 16,469

Investment income 5,364 6,019 6,955 7,469 6,536 6,638 6,238 7,277

Other income 7 0 285 50 93 10 10 10

Total income 16,757 18,096 18,555 18,412 17,400 26,535 25,444 23,755

Expenses 482 338 409 420 422 420 451 485

Contribution to policyholders' a/c 415 - 18 753 5,272 14,970 8,982 5,389

Profit before tax 15,861 17,758 18,128 17,239 11,706 11,145 16,011 17,881

Taxes (490) 1,212 1,028 997 223 - 1,007 1,125

PAT 16,351 16,546 17,101 16,242 11,482 11,145 15,004 16,756 Source: Company, HSIE Research Balance Sheet (Rs mn) FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E Source

Share capital 14,317 14,323 14,353 14,355 14,358 14,359 14,359 14,359 Reserve and surplus 34,321 36,401 46,976 51,382 54,353 60,994 73,304 86,251 Net worth 48,638 50,725 61,329 65,737 68,711 75,353 87,663 100,609 Credit/debit balance in fair value a/c 4,029 2,509 2,731 3,081 1,712 (3,228) (3,228) (3,228) Policyholders' a/c 932,657 965,784 1,148,941 1,306,111 1,513,451 1,442,536 1,697,748 1,960,985 Funds for future appropriation 5,275 6,619 6,042 8,782 10,344 12,327 12,635 12,951 Total Liabilities 990,599 1,025,637 1,219,043 1,383,710 1,594,218 1,526,987 1,794,817 2,071,317 Application

Shareholders' Investments 58,552 62,124 66,349 77,466 79,862 74,152 86,516 99,512 Policyholders' investments 188,580 215,156 270,674 332,889 400,712 467,503 - - Asset to cover linked liabilities 747,775 752,958 878,783 975,020 1,109,458 970,850 1,693,565 1,956,802 Loans 201 443 806 1,451 2,702 4,631 4,631 4,631 Fixed assets + DTA 2,152 2,197 2,138 4,221 4,757 4,778 4,778 4,778 Net current assets (6,661) (7,241) 291 (7,336) (3,273) 5,074 5,327 5,594 Debit balance in P&L - - - - - - - - Total Assets 990,599 1,025,637 1,219,042 1,383,710 1,594,218 1,526,988 1,794,817 2,071,317


Page | 14


Rating Criteria BUY: >+15% return potential ADD: +5% to +15% return potential REDUCE: -10% to +5% return potential SELL: > 10% Downside return potential

Date CMP Reco Target 9-Apr-19 365 NEU 393

25-Apr-19 363 NEU 400 14-May-19 334 BUY 400

9-Jul-19 381 BUY 407 13-Jul-19 385 NEU 407 25-Jul-19 383 BUY 445 14-Oct-19 440 NEU 445 23-Oct-19 480 NEU 445 9-Jan-20 484 NEU 480

11-Jan-20 489 NEU 480 22-Jan-20 489 NEU 495 2-Mar-20 471 ADD 505 11-Apr-20 341 BUY 415 26-Apr-20 337 BUY 460

From 2nd March 2020, we have moved to new rating system

RECOMMENDATION HISTORY

200

250

300

350

400

450

500

550

Apr

-19

May

-19

Jun-

19

Jul-1

9

Aug

-19

Sep-

19

Oct

-19

Nov

-19

Dec

-19

Jan-

20

Feb-

20

Mar

-20

Apr

-20

ICICI Pru Life TP

Page | 15


Disclosure: I, Madhukar Ladha, CFA, MBA author and the name subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. HSL has no material adverse disciplinary history as on the date of publication of this report. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Research Analyst or his/her relative or HDFC Securities Ltd. does not have any financial interest in the subject company. Also Research Analyst or his relative or HDFC Securities Ltd. or its Associate may have beneficial ownership of 1% or more in the subject company at the end of the month immediately preceding the date of publication of the Research Report. Further Research Analyst or his relative or HDFC Securities Ltd. or its associate does not have any material conflict of interest. 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HSL may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the subject company or third party in connection with the Research Report. HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066 Compliance Officer: Binkle R. Oza Email: [email protected] Phone: (022) 3045 3600 HDFC Securities Limited, SEBI Reg. No.: NSE, BSE, MSEI, MCX: INZ000186937; AMFI Reg. No. ARN: 13549; PFRDA Reg. No. POP: 11092018; IRDA Corporate Agent License No.: CA0062; SEBI Research Analyst Reg. No.: INH000002475; SEBI Investment Adviser Reg. 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