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Weak Capital Position and Provision Buffers Canara bank reported NII and PPoP growth of 21% and 32% YoY

respectively on an amalgamated basis, driven by muted slippages, higher treasury gains and sharp decline in cost of funds.

Moratorium levels stood at 22% in June against 17% in May for standalone Canara Bank.

The amalgamation resulted in sharp erosion in net worth with CET1 ratio declining by 330 bps QoQ to 6.2% for Syndicate bank and 8.4% for the merged entity as of April 1,2020. Core equity ratio further declined to 8.15% in 1QFY21 for the amalgamated entity.

We remain concerned over immediate challenges on capital and integration front, apart from asset quality worries. Moreover, weak operating metrics (PPoP/assets at 1.4%) and low provision buffers (0.2% of advances) provided little comfort.

We revise our rating recommendation from REDUCE to SELL post the sharp deterioration in networth and ABV with a revised TP of Rs80, valuing the bank at an unrevised multiple of 0.6x of FY22E P/ABV against ROA/ROE of 0.3%/8% for FY22E.

Stable recovery despite lockdown; Provision buffers remains low Canara bank reported stable recoveries/upgrades of Rs20.6bn despite collection challenges during the quarter. The 55 bps sequential decline in GNPA ratio to 8.8% for the amalgamated entity was driven by low annualized slippages owing to moratorium (at 1.1% in 1QFY21 against 3.8% for FY20) and elevated write-offs. Standard provision buffers at 0.2% of loans remains low and will impact incremental credit costs. Despite the recent improvement in PCR, it remains below industry average at 58%. We build in credit costs of 300 bps for FY21E. Decline in CoF, low interest reversals aid NIM; Core metrics remain weak Cost of funds improved by ~63 bps YoY, resulting in ~30 bps expansion in spreads. This, along with lower interest reversals led to a 30 bps YoY expansion in NIM to 2.84% despite declining loan-deposit ratio. Core metrics, however continue to remain weak with PPoP/core PPoP to assets at 1.6% /1.4%. We factor in NIM of 2.4%/2.5% for FY21/22E.

Q1FY21 Result (Rs Mn)

Particulars Q1FY201* Q1FY20 YoY (%) Q4FY20 QoQ (%)

Net interest income 60,955 32,406 88.1 32,406 88.1 Other income 26,501 18,619 42.3 18,619 42.3

Total Net Income 87,457 51,025 71.4 51,025 71.4

Operating expenses 44,602 26,625 67.5 26,625 67.5

Pre-provision profits 42,855 24,400 75.6 24,400 75.6

Provisions 38,263 18,991 101.5 18,991 101.5

Tax expense 529 2,118 (75.0) 2,118 (75.0)

Reported Net Profit 4,062 3,291 23.5 3,291 23.5

(bps) (bps) Advances Growth (%) 42.6 12.0 3,057 1.0 4,157

NIM (%) 2.8 2.3 55 2.3 55

RoA (%) 0.2 0.2 (1) 0.2 (1)

RoE ((%) 3.5 3.6 (9) 3.6 (9)

Gross NPA (%) 8.8 8.8 7 8.8 7

CMP Rs 102

Target / Downside Rs 80 / 21%

BSE Sensex 38,047

NSE Nifty 11,214

Scrip Details

Equity / FV Rs 10,302mn / Rs 10

Market Cap Rs 105bn

US$ 1bn

52-week High/Low Rs 239/Rs 74

Avg. Volume (no) 16,143,300

NSE Symbol CANBK

Bloomberg Code CBK IN

Shareholding Pattern Jun'20(%)

Promoters 78.6

MF/Banks/FIs 9.8

FIIs 2.6

Public / Others 9.0

Valuation (x)

FY20A FY21E FY22E

P/E (4.7) (4.0) 4.0

P/ABV 0.8 1.5 0.8

ROAA (0.3) (0.4) 0.3

ROAE (5.9) (8.5) 7.6

Estimates (Rs mn)

FY20A FY21E FY22E

NII 131,238 213,105 232,508

PPOP 93,598 136,816 156,226

PAT (22,358) (37,098) 37,302

Adj BV 134.2 70.1 128.6

VP Research: Mona Khetan Tel: +91 22 40969762

E-mail: monak@dolatcapital.com

Associate: Shreesh Chandra Tel: +91 22 40969714

E-mail: shreeshc@dolatcapital.com

Analyst: Prithvish Uppal Tel: +91 22 40969700

E-mail: prishvish@dolatcapital.com

Canara Bank

Sell

* Prior period numbers not comparable due to amalgamation

August 07, 2020

August 07, 2020 2

Other Important Highlights:

The bank’s divergent ‘opt-out’ approach towards moratorium renders the levels incomparable with other banks.

Loan growth at 3% YoY was mainly driven by corporate (NBFC/HFC, Infra, construction) which grew at 7.7% YoY. Management retained its loan growth target of 6-8% for FY21.

Fee income was higher by 8% YoY, against a YoY decline for most other banks.

Canara bank has provided 14% against wage hike, rest will be provided in the next quarter.

Corporate moratorium at 17% was lower than retail/MSME at 30%. ~6% of NBFCs have availed moratorium. Levels were mixed across ratings. While the retail moratorium number is high, a large part of the customers is salaried.

Of the Rs 44.6bn of restructured MSME a/cs, ~Rs 3.15bn has slipped since Jan’20.

The bank has disbursed ~Rs 68bn under the GECL scheme. Risks to the View: Higher-than-estimated credit loss from corporate and retail segments, integration related challenges, higher than anticipated stress on macro-economy from COVID-19

Quarterly Financials - Merged

(Rs mn) Q1FY21 Q1FY20 % yoy / bps Q4FY20 % qoq / bps

Interest Inc. 1,80,358 1,77,460 1.6 1,76,070 2.4

Interest Expenses 1,19,403 1,27,129 (6.1) 1,25,210 (4.6)

Net Interest Income 60,956 50,331 21.1 50,860 19.8

Other Income - Total 26,501 23,978 10.5 30,270 (12.5)

Net Operating Revenue 87,457 74,309 17.7 81,130 7.8

Employee Expenses 30,374 25,906 17.2 38,290 (20.7)

Other Opex 14,228 15,898 (10.5) 18,730 (24.0)

Total Opex 44,602 41,804 6.7 57,020 (21.8)

Cost to Income Ratio (%) 51.0 56.3 (526) 70.3 (1,928)

Pre-Provision Profits 42,855 32,504 31.8 24,110 77.7

Provisions & Contingencies - Total 38,263 38,680 (1.1) 88,960 (57.0)

Profit Before Tax 4,591 -6,176 (174.3) -64,850 (107.1)

Tax 529 330 60.2 830 (36.3)

Effective Tax Rate (%) 11.5 -5.3 1,686 -1.3 1,280

Reported Profits 4,062 -6,506 (162.4) -65,680 (106.2)

Source: Company, DART

Asset Quality (Rs mn) Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21 % qoq / bps

% yoy / bps

Gross NPA 6,48,018 6,40,936 6,19,751 6,11,281 5,75,255 (5.9) (11.2)

Gross NPAs Ratio (%) 10.3 9.6 9.4 9.4 8.8 (55) (144)

PCR - Calculated (%) 45.6 46.1 45.4 56.2 57.7 143 1,204

Net NPA 3,52,354 3,45,714 3,38,521 2,67,560 2,43,552 (9.0) (30.9)

Net NPAs Ratio (%) 5.9 5.4 5.3 4.3 4.0 (39) (192)

Advances 63,01,090 66,76,622 66,19,036 65,12,180 65,05,740 (0.1) 3.2

Deposits 87,05,707 86,88,793 90,26,080 90,55,239 90,95,696 0.4 4.5

Source: Company, DART

August 07, 2020 3

Margins improvement led by better spreads low interest reversals

Healthy fee growth and treasury gains aid other income

Source: Company, DART Source: Company, DART

Credit costs continue to remain high Sharp decline in CET 1 ratio post

amalgamation

Source: Company, DART Source: Company, DART

Ongoing moratorium aids lower slippages

ratio For the merged entity, GNPA declined QoQ

by 60 bps

Source: Company, DART Source: Company, DART

2.3

2.4

2.4

2.5

2.6

3.0

2.8

2.3

2.2

2.4

2.3

2.8

2.0

2.2

2.4

2.6

2.8

3.0

20,000

30,000

40,000

50,000

60,000

70,000

Q2

FY1

8

Q3

FY1

8

Q4

FY1

8

Q1

FY1

9

Q2

FY1

9

Q3

FY1

9

Q4

FY1

9

Q1

FY2

0

Q2

FY2

0

Q3

FY2

0

Q4

FY2

0

Q1

FY2

1

(%)(Rs mn)

Net Interest Income NIM (%)

1.3

1.1

0.9

1.2

1.0

0.8

1.1

1.1

1.2

1.0

1.2

1.2

0.5

0.7

0.9

1.1

1.3

1.5

10,00012,50015,00017,50020,00022,50025,00027,500

Q2

FY1

8

Q3

FY1

8

Q4

FY1

8

Q1

FY1

9

Q2

FY1

9

Q3

FY1

9

Q4

FY1

9

Q1

FY2

0

Q2

FY2

0

Q3

FY2

0

Q4

FY2

0

Q1

FY2

1

(%)(Rs mn)

Other Income - Total Other Income / Assets

2.4

2.9

9.5

2.7

2.8

1.9

5.2

1.8

1.9

1.7

5.0

2.5

0

2

4

6

8

10

Q2

FY1

8

Q3

FY1

8

Q4

FY1

8

Q1

FY1

9

Q2

FY1

9

Q3

FY1

9

Q4

FY1

9

Q1

FY2

0

Q2

FY2

0

Q3

FY2

0

Q4

FY2

0

Q1

FY2

1

(%)

Provisions / Assets

8.7

8.8

9.5

9.4

9.1

8.8

8.3

8.2

10

.4

10

.3

9.4

8.2

6

7

8

9

10

11

250275300325350375400425450

Q2

FY1

8

Q3

FY1

8

Q4

FY1

8

Q1

FY1

9

Q2

FY1

9

Q3

FY1

9

Q4

FY1

9

Q1

FY2

0

Q2

FY2

0

Q3

FY2

0

Q4

FY2

0

Q1

FY2

1

(%)(Rs bn)

CET1 Capital CET1 (%)

1.0

0.8

3.9

4.4

3.6

4.9

2.3

3.4

2.4

4.6

3.7

1.1

0123456

0255075

100125150

Q2

FY1

8

Q3

FY1

8

Q4

FY1

8

Q1

FY1

9

Q2

FY1

9

Q3

FY1

9

Q4

FY1

9

Q1

FY2

0

Q2

FY2

0

Q3

FY2

0

Q4

FY2

0

Q1

FY2

1

(%)(Rs bn)

Total Slippages Slippages Ratio (%)

10

.5

10

.4 1

1.8

11

.1

10

.6

10

.3

8.8

8.8

8.7

8.4

8.2

8.8

7

8

9

10

11

12

13

300

350

400

450

500

550

600

Q2

FY1

8

Q3

FY1

8

Q4

FY1

8

Q1

FY1

9

Q2

FY1

9

Q3

FY1

9

Q4

FY1

9

Q1

FY2

0

Q2

FY2

0

Q3

FY2

0

Q4

FY2

0

Q1

FY2

1

(%)(Rs bn)

Gross NPA Gross NPA Ratio (%)

August 07, 2020 4

Quarterly Financials

Profit and Loss (Rs mn) Q1FY21* Q1FY20 % yoy / bps Q4 FY20 % qoq / bps

Interest Inc. 1,80,358 1,22,005 47.8 1,20,474 49.7

Yield on Advances (%) 8.09 8.16 (7) 7.97 12

Interest Expenses 1,19,403 89,599 33.3 87,289 36.8

Cost of Dep. (%) 5.19 5.75 (56) 5.38 (19)

Cost of Fund (%) 4.56 5.28 (72) 4.95 (39)

Net Interest Income 60,956 32,406 88.1 33,185 83.7

NII to Net Operative Income 69.70 63.51 619 60.41 929

NIM (%) 2.84 2.29 55 2.28 56

Adjusted NII 60,956 32,406 88.1 32,769 86.0

Fee Income 10,391 7,600 36.7 5,740 81.0

Profit on Sale / Rev of Investments 6,370 1,560 308.3 1,830 248.1

Recovery in w/off A/cs 2,590 3,270 (20.8) 5,540 (53.2)

Other Misc. Income 7,150 6,180 15.7 8,640 (17.2)

Non-Core Other Income 16,110 11,019 46.2 16,010 0.6

Other Income - Total 26,501 18,619 42.3 21,750 21.8

Other Inc to Net Oper. Income (%) 30.3 36.5 (619) 39.6 (929)

Net Operating Revenue 87,457 51,025 71.4 54,935 59.2

Employee Expenses 30,374 15,598 94.7 21,752 39.6

Empl. Cost/Oper. Exps. (%) 34.7 30.6 416 39.6 (487)

Other Opex 14,228 11,027 29.0 12,774 11.4

Other Opex/ Assets (%) 0.2 0.2 0 0.2 (2)

Total Opex 44,602 26,625 67.5 34,526 29.2

Cost to Income Ratio (%) 51.0 52.2 (118) 62.8 (1,185)

Pre-Provision Profits 42,855 24,400 75.6 20,409 110.0

Provision towards NPAs 35,500 20,827 70.5 48,753 (27.2)

Provisions & Contingencies - Total 38,263 18,991 101.5 53,754 (28.8)

NPA Provisions as % PPP 89.3 77.8 1,145 263.4 (17,410)

Profit Before Tax 4,591 5,409 (15.1) (33,345) (113.8)

Tax 529 2,118 (75.0) (752) (170.3)

Effective Tax Rate (%) 11.5 39.2 (2,764) 2.3 926.1

Reported Profits 4,062 3,291 23.5 (32,593) (112.5)

RoA (%) 0.16 0.19 (3) (1.85) 201.0

Basic EPS (Rs) 2.79 4.37 (36.2) (31.16) (109.0)

Source: Company, DART; *Q1FY21 numbers not comparable to prior periods due to amalgamation

August 07, 2020 5

Balance Sheet Analysis (Rs mn) Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21* QoQ % /

bps YoY % / bps

Net Worth 3,66,056 4,35,850 4,40,612 3,92,930 5,27,256 34.2 44.0

CET1 (%) 8.2 10.4 10.3 9.4 8.2 (124) (5)

Tier 1 (%) 8.9 11.1 11.1 10.1 9.3 (83) 37

Total CAR (%) 11.7 14.0 13.9 13.6 12.8 (88) 107

RWA - Total 36,30,530 35,27,490 35,87,490 36,09,060 51,78,254 43.5 42.6

Advances - Total 43,27,681 42,93,186 42,26,080 43,21,752 61,71,682 42.8 42.6

Investments 15,39,233 16,12,335 16,50,508 17,62,449 25,09,079 42.4 63.0

Total Assets 70,03,226 70,74,235 71,80,928 72,38,748 1,04,61,725 44.5 49.4

RoA (%) 0.19 0.21 0.19 (1.85) 0.16 201 (3)

Deposits 61,06,738 60,94,365 62,52,404 62,53,512 90,95,696 45.4 48.9

Saving Deposit 14,85,290 15,32,350 15,87,540 16,97,490 25,34,980 49.3 70.7

Current Deposit 2,17,900 3,24,990 2,41,090 2,64,580 4,08,280 54.3 87.4

CASA Deposits 17,03,190 18,57,340 18,28,630 19,62,070 29,43,260 50.0 72.8

CASA Ratio (%) 29.5 32.4 31.0 32.6 33.8 123 432

Term Deposits 44,03,548 38,83,760 40,70,620 40,54,572 61,52,436 51.7 39.7

Source: Company, DART; *Q1FY21 numbers not comparable to prior periods due to amalgamation

Asset Quality (Rs mn) Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21* QoQ % / bps YoY % / bps

Gross Advances 44,92,477 44,59,831 43,83,370 45,11,711 65,07,412 44.2 44.9

Gross NPA 3,93,990 3,87,113 3,66,450 3,70,412 5,75,255 55.3 46.0

Gross NPA Ratio (%) 8.77 8.68 8.36 8.21 8.84 63 7

PCR - Calculated (%) 41.2 42.9 41.8 50.7 57.7 693 1,642

PCR - Inc. Tech w/o (%) 68.62 70.11 70.97 75.86 78.95 309 1,033

Net Advances 43,27,028 42,89,328 42,25,295 43,24,870 61,65,881 42.6 42.5

Net NPA 2,31,496 2,20,900 2,13,377 1,82,510 2,43,552 33.4 5.2

Net NPAs Ratio (%) 5.35 5.15 5.05 4.22 3.95 (27) (140)

Source: Company, DART; *Q1FY21 numbers not comparable to prior periods due to amalgamation

Loan Book Analysis (Rs mn) Q1FY20 Q2FY20 Q3FY20 Q4FY20 Q1FY21* QoQ % / bps YoY % / bps

Agriculture 9,26,890 9,58,340 9,90,320 9,60,430 13,41,420 39.7 44.7

MSME 8,88,510 8,68,470 9,04,630 7,87,730 10,52,630 33.6 18.5

Retail Credit 8,39,180 8,80,170 8,82,280 7,98,000 10,75,730 34.8 28.2

Corporate Advances 18,38,320 17,55,190 15,26,130 19,66,070 30,35,960 54.4 65.1

Advances - Total 43,27,681 42,93,186 42,26,080 43,21,752 61,71,682 42.8 42.6

Source: Company, DART; *Q1FY21 numbers not comparable to prior periods due to amalgamation

August 07, 2020 6

Conference Call Highlights

The bank has been shedding all high cost deposits. Despite the reduction in deposit rates, bank’s customer service and brand value has helped garner deposits

Retail advances during the quarter were flat due to muted demand but has picked up in 2QFY20. Guidance of 6-8% credit growth for the amalgamated entity.

During the quarter, the bank’s staff connected with all NPA accounts resulting in healthy recoveries despite lockdown and amalgamation.

The bank also focused on fee-based income during the quarter leading to a 33% sequential growth.

Sequential reduction in staff costs as the bank had already been providing @ 14% for wage hike and will need to provide additional 1% going forward.

Incremental focus will be on garnering low-cost deposits, retail deposits, and corporate advances.

The board has approved Rs 80bn of capital raising. Of this, ~Rs 30bn will be raised in the form of AT-I bonds. The bank expects to raise ~Rs 15bn each in Q2 and Q3 of FY21.

All 8 subsidiaries are doing well and no plans for any stake sales in the current quarter.

Asset Quality:

Management of NPA and recoveries has led to growth in NII despite fall in yields. This coupled with lower CoF has helped manage NIMs. The management guided for NIMs at ~2.8% levels

While collections were affected due to lockdown, bank made recoveries of Rs 14.4bn in the quarter. Recoveries from w/off accounts were ~Rs 2.59bn. The bank expects ~Rs 100bn of recoveries during the year. Focus will be on smaller accounts for recoveries.

Slippages during the quarter were low, although bank has prudently recognized weaker accounts. Of the total slippages in the quarter, ~Rs 90bn relate to 3 accounts of which 2 are overseas.

Retail NPAs stood at 2.22% - within which housing is 1.5%; vehicle is 2.44%; education is 3.3%; other personal loan is 3.3%. The bank expects retail NPAs to be under control in 2Q.

Moratorium:

Corporate moratorium lower than other segments. ~6% of NBFCs have availed moratorium. Levels were mixed across ratings.

Approach towards moratorium was on an opt-out basis. Unless the borrower opts out, they have been considered as under moratorium, in line with other nationalised banks.

While the retail moratorium number is high, a large part of the customers is salaried.

Some corporate accounts have been repaying but are being considered under moratorium as they have not opted out of the same.

August 07, 2020 7

Update on Amalgamation –

Implemented new software and bank is confident of rolling out the same to all branches.

All transfers have been completed (except at 1 and 2 levels). Some transfers have been delayed due to the COVID situation. Promotions have also been affected from 1st April

Structurally all HOs have been realigned. Circle offices have been consolidated as well. Branch consolidation will be completed as soon as software rollout is ready.

Treasury was amalgamated on day 1 for Indian operations. London branches were amalgamated on 1st April as well.

Bank has ensured there is no inconvenience to customers and 14 common products successfully working in all 10k+ branches. Bank is attending to all customer complaints

Harmonization of common borrowers under different classifications were classified as doubtful, and provided for as required resulting in a loss in the amalgamated P&L

On RBI circular regarding current accounts –

Where the exposure is >10% in consortium, the bank will be implementing the guidelines as prescribed by RBI for opening of current accounts.

The purpose of the guidelines is to ensure financial discipline amongst the borrowers and banks.

Clear cut monitoring of cash flows will ensure prudence

Restructuring scheme –

Only a few borrowers of the bank are eligible as of 31st March’20.

Of the Rs 44.6bn of restructured MSME a/cs, ~Rs 3.15bn has slipped since Jan’20. Bank is well positioned to handle such slippages and has already provided prudently for the same.

Other highlights

Of the overall Rs 103.8bn where standstill benefit is extended, the bank has already provided Rs 10.38bn. Such accounts will not be eligible for restructuring. The bank expects ~25-30% slippages from this pool.

Under the GECL scheme, the bank has disbursed ~Rs 68bn, and is seeing good utilization and repayment behaviour.

Ageing provisions for FY21 are not expected to be manageable.

August 07, 2020 8

Profit and Loss Account (Rs Mn)

Particulars FY19A FY20A FY21E* FY22E*

Interest Income 468,103 489,350 718,518 751,717

Interest expenses 323,328 358,111 505,413 519,209

Net interest income 144,776 131,238 213,105 232,508

Other incomes 65,750 78,132 111,973 121,394

Total expenses 104,622 115,772 188,263 197,676

- Employee cost 56,751 71,342 120,216 126,226

- Other 47,871 44,431 68,047 71,449

Pre provisioning profit 105,903 93,598 136,816 156,226

Provisions 129,183 111,154 192,186 100,552

Profit before taxes (23,280) (17,556) (55,370) 55,675

Tax provision (26,744) 4,802 (18,272) 18,373

Profit after tax 3,465 (22,358) (37,098) 37,302

Adjusted profit 3,465 (22,358) (37,098) 37,302

Balance Sheet (Rs Mn)

Particulars FY19A FY20A FY21E* FY22E*

Sources of Funds

Equity Capital 7,532 10,302 14,535 14,535

Reserves & Surplus 354,240 382,627 461,163 494,564

Minority Interest - - 0 0

Net worth 361,772 392,930 475,698 509,099

Borrowings 409,923 427,618 549,524 628,836

- Deposits 5,990,333 6,253,512 9,441,817 9,851,759

- Other interest bearing liabilities 0 0 0 0

Current liabilities & provisions 185,639 164,688 350,081 384,731

Total Liabilities 6,947,667 7,238,748 10,817,119 11,374,425

Application of Funds

Cash and balances with RBI 661,527 682,715 1,132,475 1,060,030

Investments 1,529,853 1,762,449 2,770,747 3,033,126

Advances 4,277,273 4,321,752 6,289,055 6,603,507

Fixed assets 84,106 82,763 108,392 109,667

Other current assets, loans and advances 394,912 389,069 516,450 568,095

Total Assets 6,947,670 7,238,747 10,817,119 11,374,425

E – Estimates, *Prior period numbers not comparable due to amalgamation

August 07, 2020 9

Important Ratios

Particulars FY19A FY20A FY21E* FY22E*

(A) Margins (%)

Yield on advances 8.5 8.4 9.7 8.4

Yields on interest earning assets 7.7 7.4 8.5 7.2

Yield on investments 7.4 6.9 7.9 6.6

Costs of funds 5.4 5.5 6.1 5.1

Cost of deposits 5.4 5.5 6.1 5.1

NIMs 2.4 2.0 2.5 2.2

(B) Asset quality and capital ratios (%)

GNPA 8.8 8.2 11.2 9.3

NNPA 5.4 4.2 4.7 3.7

PCR 41.5 50.7 58.0 60.0

Slippages 4.1 3.5 7.8 3.0

NNPA to NW 77.2 55.4 74.4 56.8

CASA 30.9 32.6 33.0 33.0

CAR 11.9 13.7 11.9 12.2

Tier 1 9.0 10.1 8.6 8.7

Credit - Deposit 71.4 69.1 66.6 67.0

(C) Dupont as a percentage of average assets

Interest income 7.1 6.9 8.0 6.8

Interest expenses 4.9 5.0 5.6 4.7

Net interest income 2.2 1.9 2.4 2.1

Non interest Income 1.0 1.1 1.2 1.1

Total expenses 1.6 1.6 2.1 1.8

- cost to income 49.7 55.3 57.9 55.9

Provisions 2.0 1.6 2.1 0.9

Tax (0.4) 0.1 (0.2) 0.2

RoA 0.1 (0.3) (0.4) 0.3

Leverage 23.4 22.0 27.2 26.3

RoE 1.0 (5.9) (8.5) 7.6

RoRwa 0.1 (0.6) (0.7) 0.7

(D) Measures of Investments

EPS - adjusted 4.6 (21.7) (25.5) 25.7

BV 394.7 319.9 273.6 297.4

ABV 78.9 134.2 70.1 128.6

(E) Growth Ratios (%)

Net interest income 19.0 (9.4) 62.4 9.1

PPoP 10.9 (11.6) 46.2 14.2

Adj PAT (108.2) (745.3) 65.9 (200.5)

Advances 12.1 1.0 45.5 5.0

Total borrowings 5.6 4.3 28.5 14.4

Total assets 12.6 4.2 49.4 5.2

(F) Valuation Ratios

Market Cap (Rs. mn) 104,980 104,980 104,980 104,980

CMP (Rs.) 102 102 102 102

P/E (x) 22.2 (4.7) (4.0) 4.0

P/BV (x) 0.3 0.3 0.4 0.3

P/ABV (x) 1.3 0.8 1.5 0.8

E – Estimates, *Prior period numbers not comparable due to amalgamation

DART RATING MATRIX

Total Return Expectation (12 Months)

Buy > 20%

Accumulate 10 to 20%

Reduce 0 to 10%

Sell < 0%

Rating and Target Price History

Month Rating TP (Rs.) Price (Rs.)

Jun-20 Reduce 108 105

*Price as on recommendation date

DART Team

Purvag Shah Managing Director purvag@dolatcapital.com +9122 4096 9747

Amit Khurana, CFA Head of Equities amit@dolatcapital.com +9122 4096 9745

CONTACT DETAILS

Equity Sales Designation E-mail Direct Lines

Dinesh Bajaj VP - Equity Sales dineshb@dolatcapital.com +9122 4096 9709

Kapil Yadav VP - Equity Sales kapil@dolatcapital.com +9122 4096 9735

Yomika Agarwal VP - Equity Sales yomika@dolatcapital.com +9122 4096 9772

Jubbin Shah VP - Derivatives Sales jubbins@dolatcapital.com +9122 4096 9779

Ashwani Kandoi AVP - Equity Sales ashwanik@dolatcapital.com +9122 4096 9725

Lekha Nahar AVP - Equity Sales lekhan@dolatcapital.com +9122 4096 9740

Equity Trading Designation E-mail

P. Sridhar SVP and Head of Sales Trading sridhar@dolatcapital.com +9122 4096 9728

Chandrakant Ware VP - Sales Trading chandrakant@dolatcapital.com +9122 4096 9707

Shirish Thakkar VP - Head Domestic Derivatives Sales Trading shirisht@dolatcapital.com +9122 4096 9702

Kartik Mehta Asia Head Derivatives kartikm@dolatcapital.com +9122 4096 9715

Dinesh Mehta Co- Head Asia Derivatives dinesh.mehta@dolatcapital.com +9122 4096 9765

Bhavin Mehta VP - Derivatives Strategist bhavinm@dolatcapital.com +9122 4096 9705

70

110

150

190

230

270

Aug-1

9

Sep-1

9

Oct-

19

Nov-1

9

Dec-1

9

Jan-2

0

Fe

b-2

0

Mar-

20

Apr-

20

May-2

0

Jun-2

0

Jul-20

Aug-2

0

(Rs) CBK Target Price

Dolat Capital Market Private Limited. Sunshine Tower, 28th Floor, Senapati Bapat Marg, Dadar (West), Mumbai 400013

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I. Analyst(s) and Associate (S) holding in the Stock(s): (Nil)

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Dolat Capital Market Private Limited.

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