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ED: ANISH MATHEW SA: DHANANJAY SINHA

India Equity Research | BFSI

February 15, 2019

Sector Update

BFSI Refer to important disclosures at the end of this report

HFCs losing market share; AFCs still holding ground

Bajaj Finance BUY

CMP Target Price

2,591 2,971

Cholamandalam Finance BUY

CMP Target Price

1,203 1,362

Edelweiss Financial ACCUMULATE

CMP Target Price

128 190

HDFC BUY

CMP Target Price

1,931 2,260

L&T Finance Holdings ACCUMULATE

CMP Target Price

123 161

LIC Housing Finance HOLD

CMP Target Price

442 475

Magma Fincorp BUY

CMP Target Price

85 123

Mahindra Finance BUY

CMP Target Price

376 516

Shriram City Union ACCUMULATE

CMP Target Price

1,545 1,879

Shriram Transport Finance BUY

CMP Target Price

1,019 1,368 This report is solely produced by Emkay Global. The following person(s) are responsible for the production of the recommendation:

Jignesh Shial

[email protected]

+91 22 6624 2468

Anand Dama

[email protected]

+91 22 6624 2480

Parth Sanghvi

[email protected]

+91 22 6624 2431

Growth trend for mortgage business healthy; banks gaining market share from

HFCs: The overall mortgage portfolios (Housing and LAP) of large banks (Private/PSBs)

and Housing Finance Companies (HFCs) have seen healthy growth of about 18.3% yoy

and 12.7% YTD (April – December 2018). Banks were the leader of the pack, clocking about

18.3% YTD growth vs. HFCs’ growth of about 6.3% YTD. Spurred by a superior growth

profile and tight liquidity conditions for HFCs, the overall mortgage market share of banks

(Private/PSBs combined) has improved to about 56.4% as on December 2018 vs. about

53.8% as of March 2018.

SBI remains the unbeatable leader in housing finance business in Q3FY19; HFCs

remain on weak footing: With robust portfolio growth of about 21.7% YTD (26.5% yoy),

SBI has continued to remain the undisputed king in the housing finance space, garnering

an overall market share of about 22.1% as of December 2018 vs. 20.5% as of March 2018.

HDFC Ltd, the previous market leader, is trying to defend its position after managing a

market share of about 15.7% as of December 2018 vs. 16.8% as of March 2018. LICHF,

Indiabulls Housing and DHFL also witnessed falling market share trends in the quarter,

whereas PNB Housing remained the only exception with a market share gain of 3% in

December 2018 vs. 2.7% during March 2018.

AFCs still holding ground; IndusInd and Cholamandalam gaining market shares:

Asset Financing Companies (AFCs), which is primarily engaged in vehicle financing, posted

a relatively balanced performance in Q3FY19 as AFCs managed to hold their market share

at 48% as on December 2018 vs. 49% in March 2018. Shriram Transport remained the

leader during the quarter with an overall market share of 16%, followed by MMFS at 9%.

Cholamandalam Finance upped its market share to 6% in December 2018 vs. 5% in March

2018. Among banks, HDFC Bank maintained its leadership position with an 18% market

share, followed by SBI at 11% in Q3FY19. IndusInd increased its market share to 8% in

December 2018 vs. 6% during March 2018.

Borrowing profile of HFCs improving; margins to remain under pressure: For all large

HFCs, the overall borrowing profile has improved toward longer-tenure maturities compared

with skeweness toward shorter maturities earlier. However, we expect the rebalancing of

maturity profile to continue even during Q4FY19, which will keep margins under pressure.

With a rise in overall securitization/assignments during Q3FY19, which supported margins,

would be the trend even during Q4FY19.

We stick to our preferences for promoter backed, well-governed NBFCs/HFCs with

stable liability franchise and the ability to raise money comfortably. Bajaj Finance

(BUY, TP Rs2971) remains our top pick in the sector, followed by HDFC Limited (BUY,

TP Rs2260), Cholamandalam Finance (BUY, TP Rs1362) and Mahindra Finance (BUY,

TP Rs516).

Financial Snapshot (Consolidated)

(Rs mn) EPS P/B P/E

FY19E FY20E FY19E FY20E FY19E FY20E

Bajaj Finance 66.1 92.9 7.4 5.9 39.2 27.9

Cholamandalam Finance 77.3 83.2 3.0 2.5 15.6 14.5

Edelweiss Financial 11.2 13.2 1.6 1.4 11.4 9.5

HDFC 52.2 75.6 4.1 3.8 37.9 26.2

L&T Finance Holdings 11.3 14.4 1.7 1.5 10.9 8.6

LIC Housing Finance 46.1 57.1 1.4 1.2 9.6 7.7

Magma Fincorp 10.3 11.6 0.9 0.8 8.3 7.4

Mahindra Finance 20.8 28.1 2.3 2.0 18.1 13.4

Shriram City Union 149.3 160.9 1.6 1.4 10.3 9.6

Shriram Transport Finance 109.9 134.2 1.5 1.3 9.3 7.6

Source: Company, Emkay Research Note: AFCs incl. BAF, CIFC, MGMA, MMFS, SHTF

BFSI India Equity Research | Sector Update


ED: ANISH MATHEW SA: DHANANJAY SINHA February 15, 2019 | 2

Mortgage business maintains healthy momentum; banks on stronger footing

The HFC space has been witnessing sluggish growth for the past few quarters amid weak

housing demand and rising inventories (especially in metros and urban areas). With liquidity

turmoil faced by most of them during the last quarter, the overall momentum further favored

banks. The trend is likely to remain favorable for banks even during Q4FY19; however, with

some ease in liquidity conditions, HFCs may gain some lost ground.

Growth trend stable; banks outpacing HFCs

The overall mortgage portfolios (Housing and LAP) of large banks (Private/PSB) and Housing

Finance Companies (HFCs) have seen healthy growth of about 18.3% yoy and 12.7% YTD (April

– December 2018), with banks leading the pack with about 18.3% YTD growth vs. HFCs’ growth

of about 6.3% YTD. Although we do not have the exact bifurcation of individual housing finance

and LAP, considering a smaller base of LAP portfolio (compared to housing finance), the overall

growth in the LAP book would be relatively higher.

Exhibit 1: Growth trends in mortgage portfolios

Source: Company, Emkay Research

With robust portfolio growth of about 21.7% YTD (26.5% yoy), SBI has remained the undisputed

king of the housing finance space with an overall market share of about 22.1% as of December

2018 vs. about 20.5% as of March 2018. HDFC Ltd, the previous market leader, is trying to

defend its position by managing a market share of about 15.7% as of December 2018 vs. about

16.8% as of March 2018. LICHF, Indiabulls Housing and DHFL also witnessed declining market

share trends, whereas PNB Housing remained the only exception with market share gain to 3%

in December 2018 vs. 2.7% during March 2018.

Banks regaining lost market share from HFCs

Spurred by a superior growth profile and tight liquidity conditions for HFCs, the overall mortgage

market share of banks (Private/PSB combined) has improved to about 56.4% as on December

2018 vs. 53.8% as of March 2018. Consequently, the market share of HFCs has fallen to about

43.6% as of December 2018 vs. 46.2% as of March 2018. The trend is likely to remain favorable

for banks even during Q4FY19; however, with some ease in liquidity conditions, HFCs may gain

their lost ground.

Exhibit 2: Banks further gaining market share


22.8%

12.9%18.3%

26.5%

18.1%13.0% 14.2% 13.6%

18.9%

6.9%

27.4%

0.0%

10.0%

20.0%

30.0%

Ba

nks

HF

Cs

Overa

ll

SB

I

ICIC

I B

ank

Axis

Bank

HD

FC

LIC

Ho

usin

g F

in

India

Bulls

Housin

g F

in

DH

FL

PN

B H

ousin

gF

in

MAJOR PLAYERS BANKS HFCs

52.2% 53.8% 56.4%

47.8% 46.2% 43.6%

0%

20%

40%

60%

80%

100%

Mar'17 Mar'18 Dec'18

Banks HFCs




SBI takes pole position; HDFC defends market share

With robust portfolio growth of about 21.7% YTD (26.5% yoy), SBI has remained the undisputed

king in the housing finance space with an overall market share of about 22.1% as of December

2018 vs. 20.5% as of March 2018. HDFC Ltd, the previous market leader, is seeking to defend

its position by managing a market share of about 15.7% as of December 2018 vs. 16.8% as of

March 2018. LICHF, Indiabulls Housing and DHFL witnessed declining market share trends,

whereas PNB Housing remained the only exception with a market share gain to 3% in December

2018 vs. 2.7% during March 2018. Interestingly, apart from SBI, many PSU Banks also

witnessed some surge in market shares as they have been fairly active in securitization markets

in Q3FY19.

Exhibit 3: Mortgage Market Share as on Mar’18


Exhibit 4: Mortgage Market Share as on Dec’18


AFCs holding ground; dominates 2Wheelers and used CV segment

Asset Financing Companies (AFCs), primarily engaged in vehicle financing, had shown a

relatively balanced performance as they managed to hold their market share at 48% as on

December 2018 vs. 49% in March 2018.

Exhibit 5: AFCs manages to hold the ground


Shriram Transport remained the leader with an overall market share of 16%, followed by MMFS

at 9%. Cholamandalam Finance upped its market share to 6% in December 2018 vs. 5% in

March 2018. Among banks, HDFC Bank maintained its leadership positioning with an 18%

market share, followed by SBI at 11%. IndusInd increased its market share to 8% vs. 6% during

March 2018.

SBI20.5%

HDFC, 16.8%

LIC Housing Fin10.4%

ICICI Bank, 9.8%Axis Bank

6.5%

IndiaBulls Housing Fin

6.3%

Other Banks, 16.9%

Other HFCs, 12.0%

Market Share %Mar'18

SBI22.1%

HDFC, 15.7%

LIC Housing Fin9.9%

ICICI Bank, 9.9%Axis Bank

6.3%

IndiaBulls Housing Fin

5.8%

Other Banks, 18.0%

Other HFCs, 11.5%

Market Share %Dec'18

50% 51% 52%

50% 49% 48%

0%

20%

40%

60%

80%

100%

FY17 FY18 9MFY19

Banks NBFCs




Exhibit 6: Vehicle Market Share as on Mar’18


Exhibit 7: Vehicle Market Share as on Dec’18


AFCs dominate 2-Wheeler markets, LTFH and Bajaj Finance gain market shares

On the 2-wheeler financing segment, AFCs continue to dominate, with Bajaj Finance and LT

Finance gaining major market shares. With robust portfolio growth of about 16.4% YTD, HDFC

Banks remained the market leader in 2-wheeler financing with an overall market share of ~27%

as of December 2018 vs. 26% as of March’2018. LT Finance has gained major momentum with

57.5% YTD growth, resulting in market share of 14% vs. 10% in March 2018. Similarly, Bajaj

Finance reported 32.3% YTD growth and a market share of 24% vs. 21% during March 2018.

Absence of banks and a relatively riskier asset profile could be one of the key reasons for such

dominance; however, we expect with a rise in consumption demand, this would be further

favorable for NBFC AFCs. Interestingly, the major market share loss during 9MFY19 has been

witnessed by Hero Fincorp, which is captive NBFC for Hero Group. We expect such

consolidation among financiers to continue, which would strengthen market share for well-

established players, especially like Bajaj Finance.

Exhibit 8: 2W Market Share as on Mar’18


Exhibit 9: 2W Market Share as on Dec’18


CV demand weakening; consolidation among financiers would lead to market

share gains for established players

Our discussions with management and dealers suggest that the momentum in CV demand had

been weak during Q3FY19 amid slowing infrastructure spending, elections in five major states

and draught like situation in few parts of India. Though dealers remain optimistic toward

replacement demand due to BS VI implementation during the second half of FY20, near-term

pressure is to sustain.

Overall demand for CV is expected to ease gradually in the coming quarters. In our view, with

consolidation happening among financiers whereby captive financiers (especially dealer led and

other smaller NBFCs) are unable to raise money, well-established players (Chola, MMFS and

Shriram) would witness market share gains.

18%

11%

8%

6%

4%3%

16%

9%

5%

4%

4%

3% 2%2%HDFC Bank

State Bank of India

ICICI Bank

Indusind Bank

Axis Bank

Kotak Mahindra Bank

Shriram Transport

Mahindra Finance

Cholamandalam Finance

Tata Motors Finance

Sundaram Finance

Kotak Mahindra Prime

Hinduja Leyland Finance

Magma Fincorp

18%

11%

8%

8%

4%3%

16%

9%

6%

4%3%

3% 2% 2% HDFC Bank

State Bank of India

ICICI Bank

Indusind Bank

Axis Bank

Kotak Mahindra Bank

Shriram Transport

Mahindra Finance

Cholamandalam Finance

Tata Motors Finance

Sundaram Finance

Kotak Mahindra Prime

Hinduja Leyland Finance

Magma Fincorp

26%

11%

10%21%

15%

12%

6%

HDFC Bank

Indusind Bank

L&T Fin Holdg

Bajaj Finance

Shriram City

Hero Fincorp

Muthoot Capital Sev

27%

11%

14%

24%

14%

4%

6%

HDFC Bank

Indusind Bank

L&T Fin Holdg

Bajaj Finance

Shriram City

Hero Fincorp

Muthoot Capital Sev




Exhibit 10: Used vehicles vs. New vehicles


HFCs borrowing profile improving; however, margins to remain under pressure

For all large HFCs, the overall borrowing profile has improved toward longer-tenure maturities

against skewed toward shorter maturities earlier. However, we expect the rebalancing of maturity

profile to continue even during the current quarter, which will keep margins under pressure. With

a rise in overall securitization/assignments during Q3FY19, which supported margins, would be

the trend even during Q4FY19.

Exhibit 11: HDFC - ALM Profile FY18


Exhibit 12: HDFC - ALM Profile 9MFY19


Exhibit 13: IHFL - ALM Profile FY18


Exhibit 14: IHFL - ALM Profile 9MFY19


13%26%

10%

87%

87%74%

90%

13%

0%

20%

40%

60%

80%

100%

CholamandalamFinance

Magma Fincorp Mahindra Finance Shriram Transport

Used vehicle New vehicle

10% 9%

27%

19%

35%

10% 10%

36%

23% 22%

0%

10%

20%

30%

40%

< 6 mths 6-12 mths 1-3 yrs 3-5 yrs > 5 yrs

HDFC ALM Profile - FY18

HDFC - Assets Maturity HDFC - Liabilities Maturity

21%

53%

26%19%

59%

22%

0%

20%

40%

60%

80%

0-12 mths 1-5 yrs > 5 yrs

HDFC ALM Profile - 9MFY18

HDFC - Assets Maturity HDFC - Liabilities Maturity

16%

9%

26%

21%

28%

16%

9%

29%24%

22%

0%

10%

20%

30%

40%


IHFL ALM Profile - FY18

IHFL - Assets Maturity IHFL - Liabilities Maturity

9% 7%

24%20%

40%

17%13%

41%

21%

7%

0%

10%

20%

30%

40%

50%


IHFL ALM Profile - 9MFY19

IHFL - Assets Maturity IHFL - Liabilities Maturity




Exhibit 15: DHFL - ALM Profile FY18


Exhibit 16: DHFL - ALM Profile 9MFY19


Exhibit 17: PNBHousing - ALM Profile FY18


Exhibit 18: PNBHousing - ALM Profile 9MFY19


Exhibit 19: Bajaj Finance – ALM profile FY18


Exhibit 20: Bajaj Finance – ALM profile 9MFY19


Exhibit 21: Chola - ALM profile FY18


Exhibit 22: Chola - ALM profile 9MFY19


14% 12% 14%

60%

24%

34%

17%25%

0%

20%

40%

60%

80%

< 12 mths 1-3 yrs 3-5 yrs > 5 yrs

DHFL ALM Profile - FY18

DEWH - Assets Maturity DEWH - Liabilities Maturity

33%

26% 26%

15%

27%31%

18%

24%

0%

10%

20%

30%

40%

< 12 mths 1-3 yrs 3-5 yrs > 5 yrs

DHFL ALM Profile - 9MFY19

DEWH - Assets Maturity DEWH - Liabilities Maturity

24%

10%

29%

17%

30%24%

8%

43%

16%

8%

0%

10%

20%

30%

40%

50%


PNBHousing ALM Profile - FY18

PNBHOUSI - Assets Maturity PNBHOUSI - Liabilities Maturity

18%

9%

25%

16%

32%

17%13%

30%

19%21%

0%

10%

20%

30%

40%


PNBHousing ALM Profile - 9MFY19

PNBHOUSI - Assets Maturity PNBHOUSI - Liabilities Maturity

29%

14%

25%

11%

21%17%

12%

47%

12% 11%

0%

10%

20%

30%

40%

50%


BAF ALM Profile - FY18

BAF - Assets Maturity BAF - Liabilities Maturity

36%

16%

30%

10% 8%

18%15%

36%

17%14%

0%

10%

20%

30%

40%


BAF ALM Profile - 9MFY19

BAF - Assets Maturity BAF - Liabilities Maturity

15% 15%

41%

14% 15%22%

14%

49%

11%4%

0%

10%

20%

30%

40%

50%

60%


CIFC ALM Profile - FY18

CIFC - Assets Maturity CIFC - Liabilities Maturity

23%

16%

41%

10% 11%

20% 20%

41%

8%11%

0%

10%

20%

30%

40%

50%


CIFC ALM Profile - 9MFY19

CIFC - Assets Maturity CIFC - Liabilities Maturity




Exhibit 23: SCUF - ALM profile FY18


Exhibit 24: SCUF - ALM profile 9MFY19


27% 27%31%

9% 6%

16%

28%

45%

10%

0%0%

10%

20%

30%

40%

50%


SCUF ALM Profile - FY18

SCUF - Assets Maturity SCUF - Liabilities Maturity

29%24%

33%

8% 6%

29%26%

41%

5%0%

0%

10%

20%

30%

40%

50%


SCUF ALM Profile - 9MFY19

SCUF - Assets Maturity SCUF - Liabilities Maturity




Review of Q3FY19 performance

Indian Non Banking financial services sector witnessed a volatile Q3FY19 on back of tight

liquidity and weakening growth trends. October 2018 was a washout month for most of

them barring few like Bajaj Finance etc however, with consistency in liquidity injection by

the Reserve Bank as well spurt of confidence among lenders coming back, things started

normalizing by mid of November 2018.

We have witnessed two different trends during past quarter earnings whereby NBFCs like

MMFS has preferred to maintain healthy growth momentum irrespective of cost and

availability of funds whereas others like SHTF, EDEL, LTFH, SCUF etc has preferred

alternate route of balance sheet consolidation and managing profitability.

For Emkay NBFC coverage universe, we have witnessed NII growth of ~26.8% yoy mainly

backed by low base effect and improved yoy margins. Similarly profits also grew by ~28.8%

due to declining credit costs (post IND AS implementation) and stable operating expenses.

On asset quality front, no major negative surprise was witnessed post transition to IND AS.

NBFCs under our coverage universe continued to report steady trends in asset quality and

is guiding for similar trends even for coming quarters.

We expect tight liquidity conditions would stay for a while and would continue to affect

growth prospects for most of NBFCs under coverage. Managements will maintain their

preference towards liquidity over growth in near term. This along with weak demand

(especially for Auto segment) and overhang of upcoming general elections would remain

major overhang over overall disbursements, as well as revenue and PAT growth for

Q4FY19.

Bajaj Finance remains our top pick among the sector considering superior market

positioning, low ticket retail lending and healthy liability franchise. We also remain

structurally positive on MMFS and CIFC considering diversified product portfolio, better

borrowing mix and improved ALM profile. We also like HDFC Limited due to its ability to

gain market share during recent times and attractive risk reward.

Leaders: Bajaj Finance; Laggards: Shriram City Union Finance, Shriram Transport,

Edelweiss.




Exhibit 25: Review of Q3FY19 performance

Companies Dec’18 Sep’18 Dec’17 % Chg YoY % Chg QoQ

Bajaj Finance

CMP(Rs) 2,591 NII (Rs mn) 30,941 26,652 21,822 41.8 16.1

Mkt Cap (Rs bn) 1,501 Op. Profit (Rs mn) 20,323 17,386 13,444 51.2 16.9

Reco BUY NIM (%) 11.8 11.0 11.6 75bps 19bps

Target Price (Rs) 2,971 PAT (Rs mn) 10,227 9,203 6,918 47.8 11.1

% Upside 14.67% EPS (Rs) 17.7 16.0 12.0 47.4 11.1

Cholamandalam Inv

CMP(Rs) 1,203 NII (Rs mn) 8,746 8,119 7,164 22.1 7.7

Mkt Cap (Rs bn) 193.55 Op. Profit (Rs mn) 5,588 5,207 4,345 28.6 7.3

Reco BUY NIM (%) 7.1 7.0 7.5 15bps -37bps

Target Price (Rs) 1,362 PAT (Rs mn) 3,044 3,047 2,194 38.7 -0.1

% Upside 13% EPS (Rs) 19.5 19.5 14.0 38.7 -0.1

HDFC

CMP(Rs) 1,931 NII (Rs mn) 28,711 26,288 24,420 17.6 9.2

Mkt Cap (Rs bn) 3,378 Op. Profit (Rs mn) 29,844 28,904 23,525 26.9 3.3

Reco BUY NIM (%) 3.1 2.9 3.3 17bps -20bps


% Upside 17% EPS (Rs) 12.3 14.5 33.2 -62.8 -15.1

L&T Finance Holdings

CMP(Rs) 123 NII (Rs mn) 16,517 16,764 11,924 38.5 -1.5


Reco ACCUMULATE NIM (%) 6.8 6.9 6.9

Target Price (Rs) 161 PAT (Rs mn) 5,799 5,591 3,255 78.2 3.7

% Upside 31% EPS (Rs) 2.9 2.8 2.0 48.0 3.2

LIC Housing Finance

CMP(Rs) 442 NII (Rs mn) 10,423 10,571 7,375 41.3 -1.4


Reco HOLD NIM (%) 2.3 2.5 1.9 -12bps 41bps

Target Price (Rs) 475 PAT (Rs mn) 5,963 5,732 4,751 25.5 4.0

% Upside 7% EPS (Rs) 11.8 11.4 9.4 25.5 4.0

Magma Fincorp

CMP(Rs) 85 NII (Rs mn) 3,378 3,498 2,985 13.2 -3.4

Mkt Cap (Rs bn) 26.38 Op. Profit (Rs mn) 1,721 1,942 1,530 12.5 -11.4

Reco BUY NIM (%) 8.2 8.6 7.6 -43bps 53bps

Target Price (Rs) 123 PAT (Rs mn) 740 766 448 65.0 -3.4

% Upside 45% EPS (Rs) 2.7 2.8 1.9 45.2 -3.4

Mahindra Finance

CMP(Rs) 376 NII (Rs mn) 12,040 11,666 10,028 20.1 3.2


Reco BUY NIM (%) 7.9 8.1 8.4 -27bps -54bps

Target Price (Rs) 516 PAT (Rs mn) 3,187 3,814 3,314 -3.8 -16.4

% Upside 37% EPS (Rs) 5.2 6.2 6.4 -19.7 -16.5

Shriram City Union Finance

CMP(Rs) 1,545 NII (Rs mn) 8,829 9,769 9,142 -3.4 -9.6

Mkt Cap (Rs bn) 104.08 Op. Profit (Rs mn) 5,361 6,243 5,681 -5.6 -14.1

Reco ACCUMULATE NIM (%) 12.1 13.3 14.3 -119bps -222bps


% Upside 22% EPS (Rs) 39.2 37.8 38.5 1.9 3.8

Shriram Transport

CMP(Rs) 1,019 NII (Rs mn) 20,337 20,557 17,482 16.3 -1.1


Reco BUY NIM (%) 7.8 8.0 7.9 -21bps -12bps


% Upside 34% EPS (Rs) 28.0 26.9 23.9 17.3 4.2

Edelweiss

CMP(Rs) 128 NII (Rs mn) 15,629 14,715 12,135 28.8 6.2


Reco ACCUMULATE NIM (%) 8.6 7.7 7.5 90bps 110bps

Target Price (Rs) 190 PAT (Rs mn) 2,261 2,723 2,350 -3.8 -17.0

% Upside 48% EPS (Rs) 2.6 3.1 2.6 -0.6 -17.0




ED: ANISH MATHEW SA: DHANANJAY SINHA February 15, 2019| 10

Annexure 1: SBI MaxGain Home Loan Product

The MaxGain Home Loan product by SBI has been gaining traction/prominence recently. It is

effectively a regular home loan with an overdraft (OD) facility and comes with a limit equal to the

approved home loan amount, and the home acting as collateral against the OD. The OD-like

features of this product ensure savings for the customer in the form of lower cumulative interest

costs without compromising on the liquidity of the customer. MaxGain home loans are typically

priced 5-20bps higher than an equivalent plain vanilla home loan product.

Plain vanilla home loan vs. MaxGain home loan - How it works?

In a plain vanilla home loan, one can make a partial pre-payment and the outstanding

principal will be reduced by that amount. The prepaid amount is no longer available to the

customer.

In a MaxGain home loan, the customer can deposit money in the home loan account and

reduce the outstanding balance. The surplus/prepaid amount can be again withdrawn from

the account whenever required, thus, maintaining the customer’s liquidity.

Moreover, whenever surplus funds are parked in the MaxGain account, the interest charged

for that duration will be on the reduced balance, resulting in savings on interest outgo for

the customer.

Interest saved is interest earned. When compared to parking surplus funds in savings

accounts/fixed deposits, depositing them in the MaxGain account would not only earn a

higher differential rate, but also rationalize the tax outgo.

Exhibit 26: SBI MaxGain Home Loan Product





Bajaj Finance RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst

29-Jan-19 2,516 2,971 12m Buy Jignesh Shial

23-Oct-18 2,083 2,690 12m Buy Jignesh Shial


26-Sep-18 2,316 2,785 12m Buy Jignesh Shial


19-Jul-18 2,520 2,785 12m Buy Jignesh Shial

29-May-18 2,077 2,375 12m Buy Jignesh Shial


10-Apr-18 1,926 2,284 12m Buy Jignesh Shial

2-Feb-18 1,629 2,200 12m Buy Umang Shah

16-Oct-17 1,886 2,000 12m Accumulate Umang Shah

18-Sep-17 1,912 2,000 12m Accumulate Umang Shah

19-Jul-17 1,542 1,750 12m Accumulate Umang Shah

18-May-17 1,315 1,450 12m Accumulate Umang Shah

30-Jan-17 1,055 1,360 12m Buy Umang Shah

22-Dec-16 765 1,020 12m Buy Umang Shah

27-Oct-16 1,105 1,100 12m Hold Umang Shah

6-Sep-16 1,127 1,100 12m Hold Umang Shah

27-Jul-16 979 1,100 12m Hold Umang Shah

25-May-16 734 792 12m Hold Umang Shah


RECOMMENDATION HISTORY CHART

Source: Bloomberg, Company, Emkay Research

570

1056

1542

2028

2514

3000

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

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31

-Ja

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BUY Hold SellAccumulate Reduce PriceTarget Price

Cholamandalam Finance RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst





24-Sep-18 1,181 1,762 12m Accumulate Jignesh Shial

27-Jul-18 1,463 1,762 12m Accumulate Jignesh Shial

29-May-18 1,543 1,762 12m Accumulate Jignesh Shial

24-Apr-18 1,650 1,762 12m Accumulate Jignesh Shial

10-Apr-18 1,564 1,464 12m Accumulate Jignesh Shial

31-Jan-18 1,286 1,450 12m Accumulate Umang Shah

1-Nov-17 1,225 1,350 12m Accumulate Umang Shah

18-Sep-17 1,169 1,350 12m Accumulate Umang Shah

28-Jul-17 1,180 1,350 12m Accumulate Umang Shah


27-Jan-17 1,048 1,150 12m Accumulate Umang Shah

29-Dec-16 988 1,135 12m Accumulate Umang Shah

28-Oct-16 1,185 1,370 12m Buy Umang Shah

6-Sep-16 1,109 1,370 12m Buy Umang Shah

1-Aug-16 1,152 1,370 12m Buy Umang Shah

2-May-16 851 1,000 12m Buy Umang Shah




630

859

1088

1317

1546

1775

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

ug-1

8

31

-Ja

n-1

9





Edelweiss Financial Services RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst

25-Jan-19 159 190 12m Accumulate Jignesh Shial

29-Oct-18 148 211 12m Buy Jignesh Shial

26-Sep-18 212 286 12m Buy Jignesh Shial


29-May-18 339 361 12m Buy Jignesh Shial


10-Apr-18 264 354 12m Buy Jignesh Shial

7-Nov-17 279 368 12m Buy Umang Shah

4-Aug-17 225 280 12m Buy Umang Shah




40

107

174

241

308

375

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

ug-1

8

31

-Ja

n-1

9


HDFC RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst


1-Nov-18 1,762 2,142 12m Buy Jignesh Shial





29-May-18 1,810 2,171 12m Hold Jignesh Shial

30-Apr-18 1,883 2,171 12m Hold Jignesh Shial



30-Jan-18 1,938 2,161 12m Hold Umang Shah


26-Jul-17 1,633 1,670 12m Hold Umang Shah

4-May-17 1,564 1,528 12m Hold Umang Shah






1020

1271

1522

1773

2024

2275

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

ug-1

8

31

-Ja

n-1

9





L&T Finance Holdings RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst

22-Jan-19 137 161 12m Accumulate Jignesh Shial




23-Jul-18 171 226 12m Buy Jignesh Shial




24-Jan-18 179 250 12m Buy Umang Shah




50

90

130

170

210

250

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

ug-1

8

31

-Ja

n-1

9


LIC Housing Finance RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst

31-Jan-19 449 475 12m Hold Jignesh Shial

30-Oct-18 406 461 12m Hold Jignesh Shial

26-Sep-18 433 461 12m Hold Jignesh Shial

24-Sep-18 427 525 12m Hold Jignesh Shial

27-Aug-18 529 525 12m Hold Jignesh Shial

29-May-18 488 572 12m Hold Jignesh Shial

25-Apr-18 547 572 12m Hold Jignesh Shial



31-Oct-17 599 650 12m Hold Umang Shah

31-Jul-17 690 730 12m Hold Umang Shah

26-Apr-17 676 730 12m Hold Umang Shah

17-Jan-17 532 570 12m Hold Umang Shah

21-Oct-16 600 625 12m Hold Umang Shah

19-Jul-16 508 500 12m Hold Umang Shah

20-Apr-16 467 500 12m Hold Umang Shah




390

472

554

636

718

800

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

ug-1

8

31

-Ja

n-1

9





Magma Fincorp RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst

31-Jan-19 98 123 12m Buy Jignesh Shial

2-Nov-18 108 176 12m Buy Jignesh Shial



20-Aug-18 145 202 12m Buy Jignesh Shial




2-Feb-18 159 230 12m Buy Umang Shah

10-Nov-17 175 200 12m Accumulate Umang Shah

18-Sep-17 184 200 12m Accumulate Umang Shah

3-Aug-17 172 175 12m Accumulate Umang Shah

12-May-17 133 150 12m Buy Umang Shah

5-Apr-17 122 150 12m Buy Umang Shah

10-Feb-17 98 115 12m Accumulate Umang Shah

4-Nov-16 101 120 12m Buy Umang Shah

6-Sep-16 100 125 12m Buy Umang Shah

16-Aug-16 102 125 12m Buy Umang Shah

28-Jun-16 105 130 12m Buy Umang Shah

13-May-16 89 130 12m Buy Umang Shah

28-Mar-16 76 130 12m Buy Umang Shah




70

106

142

178

214

250

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

ug-1

8

31

-Ja

n-1

9


Mahindra Finance RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst

25-Jan-19 417 516 12m Buy Jignesh Shial




24-Sep-18 393 542 12m Accumulate Jignesh Shial

30-Jul-18 513 542 12m Accumulate Jignesh Shial

29-May-18 473 515 12m Accumulate Jignesh Shial

25-Apr-18 507 515 12m Accumulate Jignesh Shial

10-Apr-18 488 508 12m Accumulate Jignesh Shial

24-Jan-18 490 520 12m Hold Umang Shah

26-Oct-17 417 290 12m Sell Umang Shah

18-Sep-17 436 290 12m Sell Umang Shah

25-Jul-17 399 290 12m Sell Umang Shah

25-Apr-17 340 290 12m Sell Umang Shah

14-Mar-17 280 240 12m Sell Umang Shah

25-Jan-17 286 240 12m Sell Umang Shah

26-Oct-16 363 363 12m Accumulate Umang Shah

26-Jul-16 314 363 12m Accumulate Umang Shah

25-Apr-16 298 390 12m Buy Umang Shah




200

270

340

410

480

550

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

ug-1

8

31

-Ja

n-1

9





Shriram City Union Finance RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst

28-Jan-19 1,752 1,879 12m Accumulate Jignesh Shial

26-Oct-18 1,566 2,002 12m Accumulate Jignesh Shial




29-May-18 2,146 2,449 12m Hold Jignesh Shial



3-Nov-17 2,247 2,380 12m Hold Umang Shah

18-Sep-17 2,152 - 12m UR Umang Shah

2-Aug-17 2,326 - 12m UR Umang Shah

13-Jul-17 2,243 - 12m UR Umang Shah

3-May-17 2,139 2,100 12m Hold Umang Shah



28-Sep-16 2,181 2,445 12m Hold Umang Shah

24-Jun-16 1,592 1,655 12m Hold Umang Shah

28-Apr-16 1,659 1,655 12m Hold Umang Shah




0

520

1040

1560

2080

2600

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

ug-1

8

31

-Ja

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9


Shriram Transport Finance RECOMMENDATION HISTORY TABLE

Date Closing

Price TP

Period (months)

Rating Analyst





26-Jul-18 1,411 1,810 12m Buy Jignesh Shial





1-Nov-17 1,197 1,250 12m Hold Umang Shah

18-Sep-17 1,085 - 12m UR Umang Shah



27-Apr-17 1,041 850 12m Reduce Umang Shah

31-Jan-17 955 880 12m Reduce Umang Shah

26-Oct-16 1,128 849 12m Reduce Umang Shah

6-Sep-16 1,238 849 12m Reduce Umang Shah

28-Jul-16 1,233 849 12m Reduce Umang Shah

2-May-16 1,083 849 12m Reduce Umang Shah




0

365

730

1095

1460

1825

16

-Fe

b-1

6

14

-Aug

-16

10

-Fe

b-1

7

9-A

ug-1

7

5-F

eb

-18

4-A

ug-1

8

31

-Ja

n-1

9





Emkay Rating Distribution

BUY Expected total return (%) (Stock price appreciation and dividend yield) of over 25% within the next 12-18 months.

ACCUMULATE Expected total return (%) (Stock price appreciation and dividend yield) of over 10% within the next 12-18 months.

HOLD Expected total return (%) (Stock price appreciation and dividend yield) of upto 10% within the next 12-18 months.

REDUCE Expected total return (%) (Stock price depreciation) of upto (-) 10% within the next 12-18 months.

SELL The stock is believed to underperform the broad market indices or its related universe within the next 12-18 months.

Emkay Global Financial Services Ltd.

CIN - L67120MH1995PLC084899

7th Floor, The Ruby, Senapati Bapat Marg, Dadar - West, Mumbai - 400028. India

Tel: +91 22 66121212 Fax: +91 22 66121299 Web: www.emkayglobal.com

DISCLAIMERS AND DISCLOSURES: Emkay Global Financial Services Limited (CIN-L67120MH1995PLC084899) and its affiliates are a full-service, brokerage, investment banking, investment

management and financing group. Emkay Global Financial Services Limited (EGFSL) along with its affiliates are participants in virtually all securities trading markets in India. EGFSL was established in 1995

and is one of India's leading brokerage and distribution house.EGFSL is a corporate trading member of Bombay Stock Exchange Limited (BSE), National Stock Exchange of India Limited(NSE), MCX Stock

Exchange Limited (MCX-SX).EGFSL along with its subsidiaries offers the most comprehensive avenues for investments and is engaged in the businesses including stock broking (Institutional and retail),

merchant banking, commodity broking, depository participant, portfolio management, insurance broking and services rendered in connection with distribution of primary market issues and financial products

like mutual funds, fixed deposits. Details of associates are available on our website i.e. www.emkayglobal.com

EGFSL is registered as Research Analyst with SEBI bearing registration Number INH000000354 as per SEBI (Research Analysts) Regulations, 2014. EGFSL hereby declares that it has not defaulted with

any stock exchange nor its activities were suspended by any stock exchange with whom it is registered in last five years, except that NSE had disabled EGFSL from trading on October 05, October 08 and

October 09, 2012 for a manifest error resulting into a bonafide erroneous trade on October 05, 2012. However, SEBI and Stock Exchanges have conducted the routine inspection and based on their

observations have issued advice letters or levied minor penalty on EGFSL for certain operational deviations in ordinary/routine course of business. EGFSL has not been debarred from doing business by

any Stock Exchange / SEBI or any other authorities; nor has its certificate of registration been cancelled by SEBI at any point of time.

EGFSL offers research services to clients as well as prospects. The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject

company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.

Other disclosures by Emkay Global Financial Services Limited (Research Entity) and its Research Analyst under SEBI (Research Analyst) Regulations, 2014 with reference to the subject

company(s) covered in this report-:

EGFSL or its associates may have financial interest in the subject company.

Research Analyst or his/her relative’s financial interest in the subject company. (NO)

EGFSL or its associates and Research Analyst or his/her relative’s does not have any material conflict of interest in the subject company. The research Analyst or research entity (EGFSL) have not been

engaged in market making activity for the subject company.

EGFSL or its associates may have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research Report.

Research Analyst or his/her relatives have actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of Research

Report: (NO)

EGFSL or its associates may have received any compensation including for investment banking or merchant banking or brokerage services from the subject company in the past 12 months. EGFSL or its

associates may have received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. EGFSL or

its associates may have received any compensation or other benefits from the Subject Company or third party in connection with the research report. Subject Company may have been client of EGFSL or

its associates during twelve months preceding the date of distribution of the research report and EGFSL may have co-managed public offering of securities for the subject company in the past twelve months.

The research Analyst has served as officer, director or employee of the subject company: (NO)

The Research Analyst has received any compensation from the subject company in the past twelve months: (NO)

The Research Analyst has managed or co‐managed public offering of securities for the subject company in the past twelve months: (NO)

The Research Analyst has received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months: (NO)

The Research Analyst has received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months:

(NO)

The Research Analyst has received any compensation or other benefits from the subject company or third party in connection with the research report: (NO)

EGFSL and/or its affiliates may seek investment banking or other business from the company or companies that are the subject of this material. Our salespeople, traders, and other professionals may provide

oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make

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rise to real or potential conflicts of interest including but not limited to those stated herein. Additionally, other important information regarding our relationships with the company or companies that are the

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be altered in any way, transmitted to, copied or distributed to any other party, without the prior express written permission of EGFSL . All trademarks, service marks and logos used in this report are trademarks

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reading, dissemination, distribution or copying of this communication is prohibited unless otherwise expressly authorized. Please ensure that you have read “Risk Disclosure Document for Capital Market

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www.emkayglobal.com




Jignesh Shial, CA [email protected] +91-22-66242468

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