25 July 2016

1QFY17 Results Update | Sector: Financials

Indiabulls Housing Finance

Sunesh Khanna (Sunesh.Khanna@MotilalOswal.com); +91 22 3982 5521 Alpesh Mehta (Alpesh.Mehta@MotilalOswal.com)/Piran Engineer (Piran.Engineer@MotilalOswal.com); +91 22 3980 4393

BSE SENSEX S&P CNX CMP: INR742 TP: INR866 (+17%) Buy 28,095 8,636

Bloomberg IHFL IN Equity Shares (m) 426.2 M.Cap. (INR b) / (USD b) 312.6/4.6 52-Week Range (INR) 820 / 551 1, 6, 12 Rel. Per (%) 7/-10/2 12M Avg Val (INR M) 1462 Free float (%) 75.8

Financials & Valuation (INR Billion) Y/E March 2016 2017E 2018E Net Fin inc 28.7 36.5 45.7 PPP 36.3 44.3 54.6 EPS (INR) 55.7 68.2 84.0 EPS Gr. (%) 4.1 22.6 23.0 BV/Sh. (INR) 254 280 315 RoA on AUM (%) 3.4 3.3 3.3 RoE (%) 27.1 25.6 28.2 Payout (%) 64.7 52.5 50.0 Valuations P/E (x) 13.3 10.9 8.8 P/BV (x) 2.9 2.6 2.4 P/ABV (x) 2.9 2.6 2.4 Div. Yield (%) 4.9 4.8 5.7

Indiabulls Housing Finance’s (IHFL) PAT grew 23% YoY but declined 7% QoQ to INR6.3b (In-line with our est. of INR6.2b). Strong AUM growth of 30.9% YoY, stable asset quality and book spreads of 318bp were the key highlights of the quarter.

AUM growth remained healthy at 31% YoY to INR 710b; Loan mix continues to shift in favor of housing loans—will increase from the existing 53% to 60% by FY18 and 65% by FY20. Home loan disbursements to the salaried segment is 70% and to the self-employed segment is 30% - would continue to maintain the proportion.

NII growth was robust at 39% YoY on the back of 318bp of book spreads and 300bp incremental spreads. Overall cost of funds stood at 9.25%, down 35bp YoY driven by decrease in bank borrowings as well as increased sell-downs, whereas incremental borrowing cost stood 8.9%.

GNPAs remained stable sequentially at 0.84%; however provisions at INR1.26b almost doubled as compared to INR0.65b in 1QFY16on a lower base as IHFL had standard asset provisions buffer during last quarter.

Other highlights a) O/S ZCBs stand at INR10.6b v/s INR19.6b in 1Q16- wont issue further ZCBs. b) Sold loans of INR11.14b in 1QFY17 v/s 5.22b in 1QFY16 c) Launched e-Home loans during the quarter d) Subordinate debt was upgraded to AAA in the quarter.

Valuation and view: IHFL’s transformation from a diversified lender to a focused mortgage player has yielded returns, with RoE/RoA improving from 3%/0.8% in FY09 to +26%/3.5% in FY16. Focus on mortgage and market share gains will drive AUM growth of 26% over the next two years. IHFL is among the lowest-levered HFCs (4.6x) to support growth. Asset quality trend is likely to remain stable. Improved borrowing profile, better credit rating and liquidity buffer will aid the company maintain healthy spreads. De-risked business model, superior profitability and +5% dividend yield warrant premium. The stock is trading at PBV of 2.4x FY18E. Maintain Buy with a target price of INR866 (2.75x FY18E PB).

Investors are advised to refer through important disclosures made at the last page of the Research Report. Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

25 July 2016 2

Indiabulls Housing Finance

Exhibit 1: Quarterly performance v/s expectations and deviations for the same Particulars 1QFY17A 1QFY17E Var. (%) Comments

Income from operations 23,720 24,249 -2 Other Income 2,255 2,283 -1 Total income 25,975 26,532 -2 In-line with estimate; Spreads stable Interest expenses 14,109 14,842 -5 Net Income 11,866 11,690 2 Book spreads sequentially stable at 318bp Operating Expenses 3,116 3,302 -6 Profit before Tax 8,750 8,388 4 Tax Provisions 2,401 2,097 14 Net Profit 6,301 6,232 1 In-line with estimate Minority Int 0 0 0 Net Profit (after minority interest) 6,301 6,232 1 In-line with estimate Int Exp/ operating inc (%) 59.5 61.2 Other Income / Total Income (%) 8.7 8.6 Tax Rate (%) 27.4 25.0 E: MOSt Estimates

AUM growth robust at +31% YoY While disbursements grew 16% YoY to INR52.5b, AUM grew 31% to INR707bn. The overall AUM mix skewed continues to be in favor of mortgages (share

remaining stable at 77%), with share of corporate financing at 23%. The company has wound up the CV financing book.

Management continues to focus on increasing the proportion of residential home loans. It targets the share to increase from existing 53% to 60% by FY18 and to 65% by FY20.

Management guides to 20-25% growth across all major parameters over the next few years

Strong growth and stable spreads led to 39% YoY NII growth NII growth was strong at 39% YoY, on back of strong AUM growth coupled with

sequentially stable book spreads of 318bp; the company has effectively mitigated the impact of lower yields by proportionately reducing the cost of funds. Overall cost of funds stood at 9.25% (9.34% in 4QFY16) and incremental cost of funds at 8.9%.

The proportion of bank borrowings declined from 55% in 1QFY16 to 47% in 1QFY17. Management targets overall share of bank borrowings at 30% by FY20. Correspondingly, the target share of market borrowings by FY20 is 40%, for sell-downs is 20% and for ECBs is 10%. Management believes the reduction in cost of funds achieved through this change in liability mix shall offset the impact of lower yields due to higher share of residential home loans.

ZCBs have come down sharply and now form 1.6% of total borrowings. The company has decided not to issue further ZCBs.

Sell down of INR11.14b during 1QFY17 v/s INR5.22b in 1QFY16.

Asset quality continue to remain stable GNPA% remained steady at 0.84% and NNPA at 0.36% respectively. GNPAs have

remained stable; however provisions at INR1.26b for the quarter almost doubled on a YoY basis. NPA provisioning stood at INR1.01b, the rest comprising standard asset provisioning.

25 July 2016 3

Indiabulls Housing Finance

Recoveries were quite strong during the quarter and exceeded total write-offs by a margin of INR150mn.

Other highlights: a) Launched e-Home loans during the quarter b) Subordinate debt was upgraded to AAA in the quarter c) Concluded a $250mn ECB transaction in 2QFY16 d) CAR stands at 23.81%, with Tier I capital at 19.87% e) The outstanding exposure to the distressed project, Palais Royale, is INR5.73bn

Valuation and view Indiabulls Housing Finance Ltd (IHFL) has transformed from a diversified lender

to a focused mortgage player. Mortgage focus has yielded returns, with RoE/RoA improving from 3%/0.8% in FY09 to +26%/3.5% in FY16.

IHFL has devised a unique strategy – 77% of the book forms mortgage/LAP (which keeps asset quality under check) and 23% of book forms commercial credit (supports blended spreads of +300bp), thereby enabling sound asset quality with superior returns.

Disbursement growth has picked up, we believe focus on mortgage and market share gains will drive AUM growth of ~26% for next two years. One of the lowest levered HFCs (4.6x), IHFL would need no further dilution over the medium term.

Consistent outperformance on key parameters relative to sector. Average three-year RoE at 27% is the best among the peer group. The company offers superior return ratios with +5% dividend yield. The stock is trading at PBV of 2.4x FY18. Maintain Buy with a target price of INR866 (2.75x FY18 PB).

Conference call highlights Macro Highlights There has been good traction in residential home sales in the Top 6 cities in

1HCY16. With YoY growth of 46%, affordable housing comprises 70% of home sales. Inventory levels with developers have come down in recent months.

Office leasing in CY16 is expected to register YoY growth. IHFL’s incremental mortgage market share stands at ~6% (including banks) Business Updates: Launched their online home loan product, e-Home loans, during the quarter.

This would enable much faster application turnaround time and would help cater to customers in Tier 2 & 3 geographies as well as NRIs.

The company’s subordinate debt was upgraded to AAA in the quarter. Currently, the company borrows at 40bp above CRISIL AAA rated corporates. With a CRISIL upgrade to AAA, management expects the spread to reduce to only 20bp.

Continue to maintain ~20-25% loan book and profit growth guidance over the medium term.

Disbursed INR52.5b in 1QFY17 (16% YoY) (HL-INR27b, LAP-INR14b and Commercial Credit –INR12b).

Self-employed segment accounts for 30% of home loan book and 24% of LAP book. Would continue to maintain the proportion.

53% of the loan book now comprise of pure HL. Looking to increase the same to 60% by FY18 and 65% by FY20.

25 July 2016 4

Indiabulls Housing Finance

Within the commercial financing segment, 60% of disbursements is towards LRD, while 40% is construction financing. The main markets for LRD are Gurgaon, Pune and Bangalore while that for construction financing are Gurgaon and Mumbai.

Others Management is hopeful of receiving partial occupancy certificate for the

distressed project, Palais Royale, within the next 4-5 months. Outstanding customer receivables due from that project amount to INR10b. IHFL’s exposure to the project stands at INR5.73b.

The break-up of INR8.75b outstanding provisions is as follows – Substandard asset provisions: INR3.4b, General provisions: INR1.86b, Specific provisions: INR1.54b, Floating provisions: 0.89b and Standard asset provisions: INR4.46b.

Capital adequacy ratio at quarter end was 23.81%, with Tier I capital at 19.87%.

25 July 2016 5

Indiabulls Housing Finance

Exhibit 2: Quarterly Snapshot FY15 FY16 FY17 Variation (%)

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q QoQ YoY Profit and Loss (INR m) Income from operations 13,641 15,186 17,011 18,777 18,290 19,850 20,751 24,009 23,720 (1) 30Interest Expenses 8,894 9,553 10,281 10,713 11,390 12,450 12,258 13,616 14,109 4 24 Net Interest Income 4,747 5,632 6,730 8,064 6,900 7,400 8,493 10,392 9,611 (8) 39Other Income 2,249 1,872 1,577 2,449 1,960 2,607 2,326 2,463 2,255 (8) 15Total Income 6,996 7,504 8,307 10,513 8,859 10,007 10,820 12,855 11,866 (8) 34Operating Expenses 1,640 1,851 2,085 3,020 1,937 2,594 2,765 3,957 3,116 (21) 61 Employee 716 894 817 822 914 1,059 1,012 1,147 1,185 3 30 Others 924 956 1,268 2,198 1,023 1,535 1,753 2,811 1,931 (31) 89PBT 5,356 5,654 6,222 7,494 6,922 7,413 8,055 8,898 8,750 (2) 26Taxes 1,119 1,171 1,441 1,983 1,810 1,858 2,010 2,083 2,401 15 33 PAT 4,238 4,483 4,781 5,511 5,113 5,555 6,045 6,815 6,349 (7) 24Minority Interest 0 0 0 0 0 0 -21 -60 -49PAT Post Minority Interest 4,238 4,483 4,781 5,511 5,113 5,555 6,024 6,754 6,301 (7) 23

Asset Quality GNPA (INR m) 3,529 3,827 4,135 3,913 4,071 4,309 4,553 5,116 5,430 6 33 NNPA (INR m) 1,463 1,523 1,626 1,871 1,935 2,028 2,169 2,393 2,533 6 31 Gross NPAs (%) 0.84 0.85 0.86 0.85 0.85 0.84 0.83 0.84 0.84 Net NPAs (%) 0.35 0.34 0.34 0.36 0.36 0.35 0.35 0.35 0.36 Provisions on AUM (%) 0.49 0.51 0.52 0.49 0.49 0.49 0.48 0.49 0.48

Margins (%) - (calculated) Yield on loans 9.8 10.2 11.2 12.0 11.1 11.2 10.7 11.6 10.8 Cost of funds 9.7 9.7 9.1 8.9 9.3 9.6 8.4 8.2 7.9 Spreads 0.1 0.6 2.1 3.1 1.8 1.6 2.3 3.4 2.9 NIMs 4.9 4.7 5.2 6.1 5.2 5.2 5.2 5.6 5.0

Ratios (%) Cost to Income 23.4 24.7 25.1 28.7 21.9 25.9 25.6 30.8 26.3 Tax Rate 20.9 20.7 23.2 26.5 26.1 25.1 25.0 23.4 27.4 RoE (Calc.) 30.48 31.23 34.54 30.72 26.07 23.08 25.47 0.00 0.00 RoA (Calc.) 3.74 3.72 3.98 3.49 3.51 3.49 3.66 0.00 0.00 Business Details Disbursements-Quarterly (INR m) 36,700 48,000 53,500 64,190 45,250 61,900 64,740 91,370 52,500 (43) 16AUM (INR m) 420,140 450,268 480,780 522,350 540,215 582,246 622,650 687,000 707,000 3 31 Borrowings (INR m) 378,640 411,030 491,560 474,870 508,630 527,620 636,290 689,100 744,800 8 46 Total AUM Mix (%) Mortgages 75 76 76 76 76 76 76 77 77 Corporate 21 21 21 22 22 23 23 22 23 CV 4 3 3 2 2 1 1 1 0 Liability Mix (%) Bank Loans 60 54 53 59 55 47 49 49 47 CP 8 7 7 7 7 6 6 0 0 NCD 32 28 28 31 35 33 31 38 40 ECB 0 0 1 3 3 2 2 2 2 Other Details Dividend (INR/sh) 8 9 9 9 9 9 9 0 0

Source: Company, MOSL

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Indiabulls Housing Finance

Story in charts

Exhibit 3: Disb. growth at 16% YoY

Source: Company, MOSL

Exhibit 4: AUM growth remains robust at +31%

*AUM numbers are reclassified, hence not comparable

Exhibit 5: AUM mix has been stable

Source: Company, MOSL

Exhibit 6: Bank borrowings will continue to decline

Source: Company, MOSL

Exhibit 7: Asset quality remains healthy

Source: Company, MOSL

Exhibit 8: Net gearing (x) among lowest compared to peers

Source: Company, MOSL

36 35 31 38 37

48 54 64

45

62 65

91

53

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

Disbursement (INR b)

369

382

391

412

420

450

481

522

540

582

623

687

707

25 23 20 20

14 18

23 27 29 29 30 32 31

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

AUM (INR b) AUM Gr. (%)

71 72 72 72 73 73 74 75 76 76 76 76 76 76 77 77

21 20 21 21 21 21 21 21 21 21 22 22 23 23 22 238 8 7 7 6 6 5 4 3 3 2 2 1 1 1 0

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

Others CV Corporate Mortgages

61 59 55 62 60 54 53 59 55 47 49 49 47

8 6 7 8 8 7 7 7 7

6 6 0 0

31 25 27 30 32

28 28 31 35

33 31 38 40

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

Sell Down (%) ECB(%) NCD (%) CP (%) Bank Loans (%)

0.8 0.8 0.8 0.8 0.9 0.9 0.8 0.8 0.9 0.9 0.9 0.9 0.8 0.8 0.8 0.8

0.3 0.3 0.3 0.3 0.4 0.5

0.4 0.4 0.3 0.3 0.4 0.4 0.4 0.4 0.4 0.4

2QFY

13

3QFY

13

4QFY

13

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

GNPA (%) NNPA (%)

5.1 5.1 5.3 5.3 5.6 5.7 6.1 5.9 6.3

3.9 4.3 4.7 4.6

1QFY

14

2QFY

14

3QFY

14

4QFY

14

1QFY

15

2QFY

15

3QFY

15

4QFY

15

1QFY

16

2QFY

16

3QFY

16

4QFY

16

1QFY

17

25 July 2016 7

Indiabulls Housing Finance

Exhibit 9: Financials: Valuation metrics

66 Rating CMP Mcap EPS (INR) P/E (x) BV (INR) P/BV (x) RoA (%) RoE (%)

(INR) (USDb) FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 FY17 FY18 ICICIBC* Buy 269 23.7 18.1 20.8 11.1 8.4 145 159 1.30 1.09 1.19 1.22 11.1 11.8 HDFCB Buy 1,247 47.8 58.4 70.2 21.3 17.7 332 386 3.75 3.23 1.90 1.89 18.9 19.6 AXSB Buy 538 19.4 31.8 37.4 16.9 14.4 243 274 2.21 1.97 1.32 1.31 13.8 14.4 KMB* Buy 765 21.3 26.8 34.0 28.6 22.5 207 240 3.69 3.19 1.61 1.82 14.2 15.4 YES Buy 1,183 7.5 78.9 97.3 15.0 12.2 391 468 3.03 2.53 1.81 1.83 22.0 22.7 IIB Buy 1,157 10.4 50.5 63.8 22.9 18.1 334 389 3.46 2.97 1.92 1.96 16.2 17.6 IDFC Bk Buy 51 2.6 3.0 4.1 17.1 12.3 42 46 1.20 1.12 1.09 1.12 7.2 9.4 FB Neutral 66 1.7 3.9 4.7 16.9 14.1 50 54 1.32 1.23 0.67 0.67 8.0 9.0 DCBB Buy 100 0.4 7.4 8.6 13.6 11.7 69 78 1.45 1.29 0.98 0.93 11.3 11.7 JKBK Neutral 69 0.5 17.6 21.2 3.9 3.2 146 162 0.47 0.42 0.99 1.05 12.7 13.7 SIB Buy 22 0.4 3.1 3.7 7.1 5.9 30 33 0.73 0.67 0.61 0.64 10.7 11.7 Private Aggregate 135.8 19.7 16.5 2.64 2.34 SBIN (cons)* Buy 230 27.0 19.3 24.3 11.9 9.4 240 259 1.01 0.93 0.49 0.54 8.3 9.7 PNB Neutral 130 3.9 15.7 19.9 8.3 6.5 200 220 0.65 0.59 0.44 0.50 8.2 9.5 BOI Neutral 110 1.4 9.3 23.5 11.9 4.7 337 356 0.33 0.31 0.12 0.27 2.8 6.8 BOB Buy 156 5.5 14.7 18.7 10.6 8.3 159 173 0.98 0.90 0.48 0.54 9.6 11.2 CBK Neutral 254 2.1 33.1 42.4 7.7 6.0 505 537 0.50 0.47 0.31 0.36 6.7 8.1 UNBK Buy 132 1.4 26.8 36.7 4.9 3.6 318 351 0.41 0.37 0.43 0.53 8.7 11.0 OBC Neutral 116 0.6 22.1 27.9 5.2 4.2 473 494 0.25 0.23 0.28 0.32 4.8 5.8 INBK UR 153 1.1 22.2 29.1 6.9 5.3 298 320 0.51 0.48 0.49 0.56 7.7 9.4 ANDB Buy 61 1.9 2.9 8.2 20.6 7.4 129 136 0.47 0.45 0.15 0.39 2.3 6.2 Public Aggregate 44.8 11.8 8.7 0.76 0.71 Banks Aggregate 180.6 16.9 13.5 1.64 1.50 HDFC* Buy 1,380 33.0 40.1 46.3 24.2 19.4 194 221 4.64 3.75 1.89 2.10 20.0 22.1 LICHF Buy 518 4.0 39.5 47.3 13.1 10.9 213 251 2.43 2.07 1.49 1.51 20.1 20.9 IHFL Buy 742 4.7 68.2 84.0 10.9 8.8 280 315 2.65 2.36 3.84 3.78 23.4 28.2 GRHF Buy 292 1.6 8.3 10.7 35.1 27.4 28 35 10.28 8.27 2.33 2.34 32.4 33.5 REPCO Buy 828 0.8 30.3 39.0 27.3 21.2 179 214 4.61 3.87 2.14 2.17 18.2 19.8 DEWH Buy 225 1.0 29.7 36.4 7.6 6.2 194 221 1.16 1.02 1.19 1.21 16.2 17.5 Housing Finance 45.1 21.3 18.0 4.30 3.80 RECL Neutral 216 3.2 59.2 68.6 3.6 3.1 336 389 0.64 0.56 2.63 2.55 18.9 18.9 POWF Neutral 222 4.4 46.8 49.1 4.7 4.5 72 107 3.09 2.08 2.69 2.35 85.1 55.0 Infra Finance 7.7 4.2 3.8 1.20 0.97 SHTF Buy 1,198 4.1 75.5 94.2 15.9 12.7 507 581 2.36 2.06 2.17 2.27 15.7 17.1 MMFS Buy 321 2.7 15.5 18.8 20.7 17.0 119 133 2.69 2.42 2.14 2.26 13.7 15.0 BAF Buy 8,978 7.3 308.1 380.8 29.1 23.6 1,631 1,956 5.51 4.59 3.14 3.02 20.6 21.2 MUTH Buy 278 1.7 24.9 32.0 11.2 8.7 157 177 1.77 1.57 3.29 3.47 16.7 19.2 SKSM Buy 864 1.7 48.8 52.5 17.7 16.5 157 210 5.49 4.12 6.30 4.48 36.7 28.6 Asset Finance 17.5 19.8 16.1 3.18 2.87 NBFC Aggregate 70.3 14.6 12.6 3.14 2.72 Financials 250.9 16.2 13.2 1.89 1.71 *Multiples adj. for value of key ventures/Investments; For ICICI Bank and HDFC Ltd BV is adjusted for investments in subsidiaries

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Indiabulls Housing Finance

Financials and valuations

Income Statement (INR Million) Y/E March 2012 2013 2014 2015 2016 2017E 2018E 2019E Financing Income 32,235 42,634 51,865 61,210 78,418 97,899 121,082 151,466 Financing Charges 19,201 25,991 32,824 39,442 49,714 61,445 75,375 93,671 Net Financing income 13,035 16,643 19,041 21,768 28,704 36,455 45,706 57,795 Change (%) 6.4 27.7 14.4 14.3 31.9 27.0 25.4 26.4 Income from Investments 1,980 2,748 4,852 8,055 8,607 9,468 10,888 11,977 Fee based income 3,604 2,397 2,329 3,439 5,230 5,753 6,616 7,278 Net Income 19,264 21,789 26,222 33,262 42,541 51,676 63,261 77,150 Change (%) 19.6 13.1 20.3 26.8 27.9 21.5 22.4 22.0 Employee Cost 1,924 2,245 2,637 3,249 4,131 5,082 6,200 7,316 Other Operating Exp. 1,770 1,761 1,470 2,285 2,118 2,320 2,435 2,555 Operating profits 15,570 17,783 22,115 27,728 36,292 44,275 54,626 67,279 Change (%) 23.3 14.2 24.4 25.4 30.9 22.0 23.4 23.2 Total Provisions 2,349 1,231 2,297 3,003 5,003 5,827 7,335 7,329 % of operating profit 15.1 6.9 10.4 10.8 13.8 13.2 13.4 10.9 PBT 13,220 16,551 19,818 24,725 31,289 38,447 47,291 59,950 Tax 3,156 3,891 4,133 5,713 7,760 9,612 11,823 14,987 Tax Rate (%) 23.9 23.5 20.9 23.1 24.8 25.0 25.0 25.0 PAT 10,065 12,661 15,685 19,012 23,529 28,835 35,468 44,962 Change (%) 34.0 25.8 23.9 21.2 23.8 22.6 23.0 26.8 Minority Interest 83 76 44 1 82 90 100 50 PAT 9,981 12,584 15,642 19,011 23,447 28,745 35,368 44,912 Change (%) 34.4 26.1 24.3 21.5 23.3 22.6 23.0 27.0 Dividend (Including tax) 4,709 7,277 11,298 10,531 17,750 17,657 20,690 26,274

Balance Sheet Y/E March 2012 2013 2014 2015 2016 2017E 2018E 2019E Capital 624 625 668 711 843 843 843 843 Equity Share Capital 624 625 668 711 843 843 843 843 Reserves & Surplus 48,432 51,061 56,387 65,606 106,096 117,185 131,862 150,501 Net Worth 49,056 51,686 57,055 66,317 106,939 118,027 132,705 151,343 Equity Net worth 49,056 51,686 57,055 66,317 106,939 118,027 132,705 151,343 Minority Interest 1,315 1,449 19 20 0 0 0 0 Borrowings 252,870 312,858 355,395 474,874 601,900 712,423 908,548 1,127,783 Change (%) 30.9 23.7 13.6 33.6 26.7 18.4 27.5 24.1 Deferred Tax Liability -1,098 -1,641 -1,848 -26 -26 -26 -26 -26Total Liabilities 302,143 364,351 410,622 541,186 708,812 830,424 1,041,226 1,279,100 Cash and bank balance 41,956 48,882 44,190 34,903 29,028 6,532 26,949 48,571 Investments 17,968 23,079 29,470 61,638 106,930 117,623 129,385 141,030 Change (%) -41.8 28.4 27.7 109.2 73.5 10.0 10.0 9.0 Loans 254,675 307,824 354,446 460,396 609,000 749,919 936,647 1,150,799 Change (%) 31.1 20.9 15.1 29.9 32.3 23.1 24.9 22.9 Net Current Assets -12,901 -15,889 -18,639 -16,978 -37,521 -45,026 -53,130 -62,694Net Fixed Assets 445 456 469 541 690 690 690 709 Total Assets 302,143 364,351 410,622 541,186 708,812 830,424 1,041,226 1,279,100

AUM Mix (%) Assets Under Management 275,212 344,250 411,690 522,350 687,000 866,958 1,089,125 1,353,881 Change (%) 38.8 25.1 19.6 26.9 31.5 26.2 25.6 24.3 On Books 253,460 307,824 354,446 460,396 609,026 749,919 936,647 1,150,799 % of AUM 92.1 89.4 86.1 88.1 88.7 86.5 86.0 85.0 Off books 21,752 36,426 57,244 61,954 77,975 117,039 152,477 203,082 % of AUM 7.9 10.6 13.9 11.9 11.4 13.5 14.0 15.0 E: MOSL Estimates

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Indiabulls Housing Finance

Financials and valuations

Ratios Y/E March 2012 2013 2014 2015 2016 2017E 2018E 2019E Spreads Analysis (%) Avg. Yield - on Fin. Portfolio 14.1 13.5 13.1 12.7 12.6 12.6 12.4 12.4 Avg Cost of funds 8.6 10.1 10.1 9.7 9.4 9.4 9.3 9.2 Interest Spread on on books 5.5 3.4 3.0 3.0 3.2 3.3 3.1 3.2

Net Interest Margin on AUM 5.5 5.4 5.0 4.7 4.7 4.7 4.7 4.7

Profitability Ratios (%) RoE 21.1 25.0 27.0 30.8 27.1 25.6 28.2 31.6 RoA 3.7 3.8 4.0 4.0 3.8 3.7 3.8 3.9 RoA (on AUM) 3.5 3.5 3.6 3.6 3.4 3.3 3.3 3.4 Int. Expended/Int.Earned 59.6 61.0 63.3 64.4 63.4 62.8 62.3 61.8 Fee income/Net Inc. 18.7 11.0 8.9 10.3 12.3 11.1 10.5 9.4 Cost/Income Ratio 19.2 18.0 17.1 16.6 14.7 14.3 13.6 12.8 Empl. Cost/Op. Exps. 52.1 56.1 64.2 58.7 66.1 68.7 71.8 74.1

Asset quality GNPA (%) 0.79 0.79 0.83 0.85 0.80 0.80 0.80 0.80 NNPA (%) 0.33 0.33 0.36 0.36 0.40 0.40 0.40 0.40

Valuations 2012 2013 2014 2015 2016 2017E 2018E 2019E Book Value (INR) 157.3 165.4 170.8 186.5 253.8 280.2 315.0 359.2 BV Growth (%) 7.8 5.1 3.3 9.2 36.1 10.4 12.4 14.0 Price-BV (x) 4.7 4.5 4.3 4.0 2.9 2.6 2.4 2.1 Adjusted BV (INR) 157.4 165.4 170.8 186.5 253.8 280.2 315.0 359.2 Price-ABV (x) 4.7 4.5 4.3 4.0 2.9 2.6 2.4 2.1 EPS (INR) 32.0 40.3 46.8 53.5 55.7 68.2 84.0 106.6 EPS Growth (%) 34.0 25.8 16.3 14.2 4.1 22.6 23.0 27.0 Price-Earnings (x) 23.2 18.4 15.8 13.9 13.3 10.9 8.8 7.0 DPS (INR) 13.0 20.0 29.0 35 36.0 35.8 42.0 53.3 Dividend Payout (%) 40.6 49.6 61.7 47.9 64.7 52.5 50.0 58.5 Dividend Yield (%) 1.8 2.7 3.9 4.7 4.9 4.8 5.7 7.2 E: MOSL Estimates

25 July 2016 10

Indiabulls Housing Finance

Corporate profile

Exhibit 11: Shareholding pattern (%) Jun-16 Mar-16 Jun-15

Promoter 24.2 24.2 27.8

DII 2.6 2.6 2.7

FII 59.4 58.7 39.4

Others 13.8 14.5 30.1

Note: FII Includes depository receipts

Exhibit 12: Top holders Holder Name % Holding

EUROPACIFIC GROWTH FUND 6.2 COPTHALL MAURITIUS INVESTMENT LIMITED 5.3 MERRILL LYNCH CAPITAL MARKETS ESPANA S.A. S.V 3.8 RAJIV RATTAN 3.5 CREDIT SUISSE (SINGAPORE) LIMITED 2.5

Exhibit 13: Top management Name Designation

Sameer Gehlaut Chairman

Gagan Banga Vice Chairman and MD

Ashwini Kumar Deputy Managing Director

Mukesh Garg Chief Financial Officer

Pinank Shah Head Treasury

Ramnath Shenoy Executive Vice President, IR

Exhibit 14: Directors Name Name

Sameer Gehlaut Shamsher Singh Ahlawat*

Gagan Banga Aisharya Katoch

Rajiv Rattan Joginder Singh Kataria

Saurabh Kumar Mittal Ajit Kumar Mittal

Karan Singh Khera* Ashwini Omprakash Kumar

Ram Kumar Sheokand* Kamalesh Shailesh Chandra Chakrabarty*

Prem Prakash Mirdha*

*Independent

Exhibit 15: Auditors

Name Type

Deloitte Haskins & Sells LLP Statutory N D Kapur & Co Internal

Exhibit 16: MOSL forecast v/s consensus EPS

(INR) MOSL

forecast Consensus

forecast Variation

(%)

FY17 68.2 68.3 -0.2

FY18 84.0 82.7 1.6

Company description Indiabulls Housing Finance (IHFL) is the fourth largest housing finance company in India with AUM of INR707b. It was established as a wholly-owned subsidiary of Indiabulls Financial Services (IBFSL). In early 2013, keeping with IHFL’s long-term commitment to the housing finance business, the company was reversed-merged into its housing finance subsidiary IHFL. IHFL offers home loans to target client base of middle and upper-middle income individuals and small and medium-sized enterprises, or SMEs. It has presence across 200+ locations across India.

Exhibit 10: Sensex rebased

25 July 2016 11

Indiabulls Housing Finance

N O T E S

25 July 2016 12

Indiabulls Housing Finance

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