Jun 30, 2016 - ... reaching beyond payments transactions to manage their customers' entire .... Hashtag Banking -. Banki
1ST - 3OTH June 2016 . Vol 3 Issue 5. For Private Circulation Only
pg 29. INTERVIEW: Mangu Singh pg 32. INTERVIEW: Harsh Dhingra pg 35. Indian Economy – Trend indicators pg 37. PhillipCapital Coverage Universe – Valuation Summary
Ground View - Previous Issues VOL 3 . ISSUE 5 . 1ST - 30TH JUNE 2016 Vineet Bhatnagar- Managing Director and CEO EDITORIAL BOARD Naveen Kulkarni, Manish Agarwalla, Kinshuk Bharti Tiwari COVER & MAGAZINE DESIGN Chaitanya Modak, www.inhousedesign.co.in EDITOR Roshan Sony RESEARCH Banking, NBFCs Manish Agarwalla | Pradeep Agrawal | Paresh Jain Consumer Naveen Kulkarni | Jubil Jain | Priyam Tolia Cement Vaibhav Agarwal Economics Anjali Verma Engineering, Capital Goods Jonas Bhutta Infrastructure & IT Services Vibhor Singhal | Shyamal Dhruve Logistics, Transportation & Midcap Vikram Suryavanshi Midcap Amol Rao Media Manoj Behera | Naveen Kulkarni Metals & Automobiles Dhawal Doshi | Nitesh Sharma | Yash Doshi Oil & Gas Sabri Hazarika Pharmaceuticals Surya Patra | Mehul Sheth Telecom Naveen Kulkarni | Manoj Behera PORTFOLIO STRATEGY Anindya Bhowmik
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TECHNICALS Subodh Gupta PRODUCTION MANAGER Ganesh Deorukhkar MID-CAPS & DATABASE MANAGER Deepak Agrawal SR. MANAGER - EQUITIES SUPPORT Rosie Ferns FOR EDITORIAL QUERIES PhillipCapital (India) Private Limited No. 1, 18th Floor, Urmi Estate, 95 Ganpatrao Kadam Marg, Lower Parel West, Mumbai 400 013 SALES & DISTRIBUTION Ashvin Patil, Shubhangi Agrawal, Kishor Binwal, Bhavin Shah, Ashka Gulati, Archan Vyas CORPORATE COMMUNICATIONS Zarine Damania | Bharati Ponda
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Letter from the MD
CONTENTS
Most people in the banking industry agree that ‘digital banking’ is the wave of the future. While digital banking is often equated with mobile or online banking, in the banking context, digitisation is mainly the process that all banks need to go through in order to provide better services to customers. Banking customers have been changing their behaviour in line with technological developments and increasing their demand for digital channels. Customers’ disloyalty to banks continues to increase. All of these have created enabling conditions for fin-tech firms to target the traditional financial sector. The big questions are – will fin-tech firm steal a large part of the businesses from traditional banks? Will their efforts result in margin compression across the sector? What strategy would banks adopt to counter the fin-tech onslaught? Will virtual branches replace the traditional brick and mortar
4. COVER STORY: Digitisation in banks – Collaboration, not competition Most banks in India believe that tie ups or collaboration with fin-tech firms would be an appropriate strategy to embrace digitisation
branches? Our cover story on “Digitisation in banks – collaboration not
29. INTERVIEW: Mangu Singh
competition” evaluates the impact of digitisation wave on banks and analyses the strategies of various banks to combat the new wave of digital disruption. Our analyst, Manish Agarwalla, interacted with leading technology consultants in the BFSI space, met up with digital heads of banks, fin-tech firms, and regulators, to understand how prepared banks are to take on fin-tech companies, their strategy in terms of service delivery and product offerings, and their current technology capability. Given the onslaught of fin-tech firms in the world of financial services, banks run the risk of becoming redundant if they do not adopt new technology. Most banks in India believe that tie-ups or collaborations with fin-tech firms
Managing Director of Delhi Metro Rail Corporation (DMRC) talks to us about the evolution of the Delhi metro network
would be an apt strategy to embrace digitisation. Adoption of efficient technology will not only reduce operating costs for banks, but would even open up new streams of revenue. Also in this issue – an interview with Mr. Harsh Dhingra, Chief Country Representative, India, Bombardier Transportation, where he talks of his company’s journey in India and the opportunity he sees in the India railways and the metro segment, and an interview with Mr Mangu Singh, the Managing Director of Delhi Metro Rail Corporation (DMRC),
32. INTERVIEW: Harsh Dhingra Chief Country Representative, India, Bombardier Transportation takes us through the journey of the company in India
35. Indian Economy – Trend indicators
where he talks about evolution of the Delhi Metro network, execution challenges, and about other metro projects in the country. Best Wishes
37. PhillipCapital Coverage Universe: Valuation Summary
Vineet Bhatnagar
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COVER STORY BY MANISH AGRAWALLA
E-CASH THE ‘NEW CURRENCY’
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DIGITISATION IN BANKS – Collaboration, not competition
PAYMENT VIA QR CODES
pg. 6
Digitisation in banking - Brick to click
____________________________ pg. 7
Fin-tech companies -
Unbundling financial services
____________________________ pg. 10
Banks preparedness to combat Fin-tech
- Geared to challenge new waves
of digital disruption
____________________________ pg. 22
Digitisation strategy of banks -
Collaboration with Fin-tech and co-existence
of physical with virtual
____________________________ pg. 25
Challenge – Evolving the digitisation culture
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The fierce invasion of fin-tech companies in the banking space shook up its very foundations. These companies brought about such a global revolution in the sector that the way people bank underwent a drastic change in the last 10 years or so. Banking continues to evolve under the advent of the technological and psychological changes that these fin-tech companies compelled the market to make. While banks quickly adopted digital technologies transactions and payments, they have lagged behind in incorporating these advancements in lending. Several young fin-tech companies have stepped into this gap and made quite a place for themselves by offering efficient lending solutions. However, in general, the trend seems to be more towards collaboration rather than rivalry, especially from the fin-tech companies. They realise that with the support of banks, they can rise to phenomenal heights. Banks will have to forge relationships with these fin-tech companies in order to innovate, and will continue to even invest in some of them. Most banks in India believe that tie-ups or collaboration with fin-tech firms would be an apt strategy to embrace digitisation. For now, multiple payment technologies will coexist in India, as it is a diverse market with different customer segments. Even globally, cards have not completely replaced cash transactions. There will be enough space and opportunity for different players – whether it is mobile wallets, payment banks, or a universal bank. Collaboration between banks and fin-tech companies would enrich customer experience while healthy competition is also necessary to evolve technology. It is clear that the digitisation journey will not be easy. However, by breaking it down into stages and taking a disciplined approach, Indian businesses can go beyond merely doing better. Ultimately, they can transform their businesses by activating new sources of revenue that take full advantage of India’s rapid digital growth. G RO U N D V I EW
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DIGITISATION IN BANKING Most people in the banking industry agree that ‘digital banking’ is the wave of the future. Indeed, many would contend that it is not at all a future wave, but that it is already here. While digital banking is often equated with mobile or online banking– and these do involve digital applications of some sort –in the banking context, digitisation is mainly the process that all banks need to go through in order to provide better services to customers. Digitisation also empowers customers with selfsufficiency. Digital banking is so important because it allows banks to become virtually omnipresent. Challenges often give birth to opportunities –the major
Brick to click
challenge that Indian banks face today is digitisation, and this process has given birth to many opportunities such as netbanking, mobile banking, and insta-pay. Digitisation is enabling banks to meet the needs of its customers across the spectrum of age and gender. Banking customers have been changing their behaviour in line with technological developments and increasing their demand for digital channels. Customers’ disloyalty to banks continues to increase. All of these have created the enabling conditions for start-ups to target the traditional financial sector. Backed by venture funds, many of these start-ups, which in banking parlance are called fin-tech companies, are providing banking products at much lower costs and with a greater degree of convenience. Today, fin-tech businesses are creating ondemand credit, using self-learning models to analyse risk, or making it easier for businesses and individuals to transact. Globally, the financial industry is seeing unbundling of services. The big question is – will fin-tech firm steal a large part of the businesses from traditional banks? Will their efforts result in margin compression across the sector? What strategy would banks adopt to counter the fin-tech onslaught? Will the virtual branch replace the traditional brick and mortar branch? Mr Mahesh Makhija (Partner, Ernst &Young) believes that every part of the financial value chain is under threat from fin-tech companies; entire payment ecosystems have exploded and banks are trying hard to match fin-tech offerings. Even on the lending side, banks are trying to partner with fin-tech on the front-end for customer engagement programmes (need analysis, generating leads). On CASA (current account and savings account) fin-tech companies can be a threat. He does not see a risk to banks in the near term, but in the long term, challenges from fin-tech companies will force banks to collaborate with, acquire, or build these fin-tech companies.
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F I N -T E C H C O M PA N I E S
What are Fin-tech Companies? Unbundling the financial services Capital float LendingKart Idifi
i-lending Faircent Neogrowth
Scripbox Advicesure Coverfox Perfios Medimanage Policybazaar Bluechip FundsIndia Creditseva
Apnapaisa Switchme Homeloan PayTM Mobikwik PayU
Oxigen Remit2India Mwipe
Remitguru Freecharge Citrus
BankBazaar Apna Paisa
Fin-tech is a short form of financial technology. These kinds of companies, usually start-ups, use software to provide fi-
Global Fin-tech financing activity
nancial services. Typically, their purpose is to disrupt incum-
USD BN
Deal Volume
5.7
468
2015
22.3
1108
2014
12.7
871
2013
4.6
772
of these companies is a manifestation of strong customer re-
2012
3.2
610
quirements for specialised and customised services. In 2015
2011
2.5
459
worldwide, fin-tech firms received a total financing of US$
2010
1.8
338
bent financial systems and corporations that rely less on
2016 (Q1)
software. These firms provide specialised services in areas of payment and remittances, lending, personal finance and retail investment, and business infrastructure. The breeding
22.3bn while Indian fin-tech companies received US$ 1.6bn.
1 - 30 JUNE 2016
Source: Accenture & KPMG
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TYPES OF FIN-TECH COMPANIES Payment and remittance These companies allow individuals and businesses to accept payments over the web and mobiles. These start-ups aim to integrate payment processing into websites and mobile apps without having to maintain merchant accounts. To minimise fraud, transfers are made directly into the bank accounts linked to the payee.
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Lending Many lending-services companies have recently sprung up to service the demand for access to finance from consumers and businesses alike. These lending-service start-ups aim to outwit traditional lending mechanisms and use alternative credit models and data sources to provide faster access to capital.
Personal finance and retail investment Another breed of fin-tech companies help individuals save money and manage and invest their finances. These kinds of companies generally help people to compare different options and enable them to make more informed decisions based on their personal needs.
Banking infrastructure New-age fin-tech companies are solving infrastructure issues for traditional banks, institutions, and start-ups by effectively using technology. These companies have drastically improved access to information, analytics, and digitised data sources – in short, they have done things that weren’t even thought of until a few years ago.
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The major segments that fin-tech companies have “disrupted include mobile payments (PayTM), money transfers(Western Union), loans(Capital Float), and wealth management(Policy Bazar).”
Source: MXV Consulting
Various financial products offered by fin-tech firms are at different stages of their product life cycles. Concepts such as crowd funding and consumer lending are at a nascent stage. These products would need legitimacy and recognition by the regulator and acceptance by customers. RBI’s recent consultation paper on peer-to-peer lending provides legitimacy to the consumer-lending marketplace model. With increased acceptance by customers, P2P lending could gain traction. Ease of transaction and enhanced customer experience has attracted potential buyers of life insurance and general insurance to fin-tech companies like Policy Bazaar and Bank Bazaar. Payment services of fin-tech companies such as Paytm, PayU, or Citrus are widely used to avail services like cabs, utility bill payments, money transfer, shopping, and movie tickets. Payment and remittance gained wide acceptance among customers due to the ease of use and low transaction costs.
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B A N K S P R E PA R E D N E S S T O C O M B A T F I N -T E C H
Payment solutions: Continuous innovation; nothing is sacrosanct
Payment solution provided by banks in India are comparable to the best of fin-tech firms
Safe, secure, sound, and efficient payment
The proportion of these (which includes retail
systems for the country have been the mission
electronic clearing, mobile banking, and pre-
of every regulator. In order to expand the reach
paid payment instruments or PPIs)has increased
of the payment system and encourage product
rapidly to 28.1% in FY16 vs. just 7.4% in FY09.
innovation, the Reserve Bank of India (RBI) estab-
Paper-clearing and even the usage of cards are
lished an umbrella organisation called National
in a decline-mode. Within cards, the fall is mostly
Payment Corporation of India (NPCI) in 2009
in debit card usage at ATMs largely because of
for all retail payment systems in India. There has
increased acceptance of e-money by merchant
been a shift in payment mode to clicks from cards
establishment and efficient and secure payment
– mainly due to new technology, improved IT
systems. Emerging trends suggest that the pro-
infrastructure, and high smartphone penetration.
portion of mobile banking and PPI will increase
Data indicates that the trend is towards paperless
significantly, largely substituting ATM transac-
transactions.
tions.
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Payments are paramount
consumer interactions but also boost the number of charged transactions and the cash flowing through
Payments dominate the average consumer’s banking relationship.
Providing
strong
payment
the banking system (through prepaid, current
solutions
accounts, and consumption-related lending).
(as a part of a larger strategy for digital banking) is imperative for banks. As per McKinsey’s report, the
•
On the corporate side: Transaction banks that
average customer interacts with his or her bank at
execute well on digital cross-selling can increase
least twice a day for payments-related matters, such as
their market share of corporate deposits and lending.
buying a financial product, checking on a payment, or
By tailoring payments solutions to the under-served
paying a bill. These interactions represent more than
segments (small and informal merchants, youth,
80% of customer interactions with the banks. Making
international travellers, migrants, and low-income
an excellent payments platform is necessary for cross-
customers), banks can shift a bigger share of
selling other financial services.
payments to bank-owned channels.
Digital payments offer good solutions
Banks should leverage data
Digital payments provide banks with a platform to boost
Banks own rich reserves of raw behavioural data. Mobile
fee and interest income, reach out to the underserved
channels enhance this data pool with location and
segment, and extend the value proposition. •
search data, which can provide valuable insights into
On the retail side: Mobile-payments solutions
future customer choices. Banks could leverage their
(mobile
transfers,
data strengths to create new services along the full span
international remittances, small-merchant mobile
of the consumer decision journey, reaching beyond
card readers) not only increase the frequency of
payments transactions to manage their customers’ entire
peer-to-peer
(P2P)
money
RTGS Cards Mobile Banking
Retail Electronic Clearing Prepaid Payment Instruments (PPIs) Paper Clearing
120 100 80 60 40 20 0
2015-16
2014-15
2013-14
2012-13
2011-12
Transaction volume through various payment instruments
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Collaboration between banks and fin-tech companies “would enrich customer experience while healthy competition is also necessary to evolve technology.” digital wallet (for example, by optimising loyalty awards and special offers, payments terms, and instruments). If banks cling to their traditional, narrow view of the payments ecosystem, fin-tech firms will not only take the additional revenues from these channels, but will also enjoy prime access to a customers’ ‘digital trail’, including essential transaction information and direct traffic to preferred service providers within the digital sphere.
Private banks are leaders, as always Private banks have initiated their digital banking transformation processes much ahead of their PSB peers. Today, the products and features offered by private banks are very much in line or even better than some of the products offered by fin-tech companies. Mobile banking
Payment solutions have seen a sea change
commands close to double-digit share (10% of overall
The Indian market has seen the advent of fin-tech
transactions) for private banks while for PSB giants such
companies – Paytm, Mobikwik, Oxigen, and Citrus Pay
as SBI, it is just 3%. PSBs are definitely lagging behind
– and the market share of pre-paid payment instrument
in their digital initiatives – the share of mobile banking
(PPIs) in total payment transactions in terms of volume
transactions is almost nil for PNB and BoI.
has increased to 4.8% from virtually nothing five years
Not all is lost– cash is still king
ago. Increasing penetration of smartphones have increased customers’ expectations from their bankers – they demand efficient, safe, and cost-effective payment solutions. Realising the gravity of the situation, most banks now offer mobile and digital payments.
necessarily the worst thing in the world. Mr. PareshRajde (Chairman, Suvidha) pointed out in a GV conference that in India, only 8% of the population transacts electronically and the rest transacts in cash. Even for a developed country like the US, 50% of transactions
Penetration of smart phone %
still happen through cash. In India, around 90% of the
CY13
CY14
CY15
China
43
48
51
North America
57
64
69
9
13
17
India
At this point, not having a strong digital setup is not
population earns their livelihood in cash. Hence, selfservice smartphone-based models cannot replace brick-and-mortar banking models entirely, at least not immediately. To conclude, payment and remittance solutions provided by private banks in India – either through net,
Smartphone shipment and data usage in India
mobile, or phone banking platforms– are comparable to the best of fin-tech firms. These banks have either
Smartphone shipment (mn) Wireless subscriber (mn)
CY12
CY13
CY14
CY15
built technology or partnered with fin-tech firms.
16.3
44.0
81.5
102.6
Moreover, NPCI’s unified payment interface (UPI)
864.7
886.3
944.0
1010.9
platform is all set to provide a payment solution based
Data Usage MB/user
on a virtual address, thus overcoming the need for
Idea
140.0
257.0
490.0
635.0
cumbersome bank account numbers or IFSC codes. Mr
Bharti
152.0
317.0
584.0
793.0
Rajesh Prashad (Head, Rupay – NPCI) believes that card transactions will continue in India for some more time,
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Digital Solutions by Banks AXIS BANK
HDFC BANK
ICICI BANK
KOTAK MAHINDRA BANK
SBI
Digital Banking
Axis Mobile - mobile banking; Ping Pay - wallet; Lime - social wallet
Mobile banking - PAYZAPP / HDFC Bank APP
iMobile/ Pockets
Mobile banking; Hashtag Banking; kaypay
State Bank freedoM
No. of transactions
60 in axis mobile
100 in PAYZAPP
150 services in iMobile
70+ services
na
Share of mobile banking in overall transaction volume
12%
6%
9%
14%
3%
Common Features
1. View account details & transact - deposit / loan / credit card. 2. Money transfer Mobile. 3. DTH connection recharge. 4. Utility bill payment. 5. Wealth management products. 6. Demat account payment. 7. Merchant payment. 8. Account service request.
Special features
Non bank customer can use PingPay to receive / request money & recharge
Chillr is a mobile wallet can be used by bank and non bank customer
Lime is a social wallet - can be used to send / receive money through social media Expense manager
Apart from standard ser- Hashtag Banking vices, iMobile provides Banking though social features like “Now block media a card, stop a cheque, track your deliverables,“
Buddy is a wallet
Forex services, Investment & Insurance Manage payees, link accounts, cancel instructions Pocket is a mobile wallet which can be used by bank customer as well as non bank customer also
even though people are moving to mobile technology. Multiple payment technologies will coexist, as India is a diverse market with different customer segments. Cash transactions have not been completely replaced by cards, even in the most advanced countries. There will be enough space and opportunity for different players – whether it is mobile wallets, payment banks, or a universal bank. Unified payment interface can be a challenge to mobile wallets
the UPI platform using a virtual address. A mobile-pin will then be needed to authenticate the transactions. There is NO separate or special app for UPI. It will be an update to existing net banking apps of banks that would provide UPI services. Initially, banks will be allowed to provide UPI services through its net banking apps, but based on that experience, PPIs may be included in the UPI ecosystem. There is lot of debate about survival of wallets with the advent of UPI services. Mr YadvendraTyagi (Director Business development, Citrus) says that the unified
National Payment Corporation of India (NCPI) is set
payment interface will actually help wallets, as customers
to make transactions easier by introducing the Unified
across banking channels would be able to use them.
Payments Interface (UPI). This interface will allow a user
However, their survival would depend on the product
to transfer money to another user in a single step. UPI
quality and customer experience. The survival of a ‘wallet’
users will not need to use their credit/debit cards or net-
company would be at risk if its business model is based
banking credentials to make/authenticate payments
around only money transfers. Fin-tech companies that are
through UPIs. Instead, users will be able to transact on
building their business model around payment solutions
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Digitisation in lending Partnering can create a sea of change Customers have taken to digital channels like ducks
The unique selling propositions of fin-tech companies
to water, compelling financial institutions to provide
include:
the convenience of anywhere, anytime banking. While
1. Convenience: Anywhere, anytime banking
digitisation has transformed transactional banking, it
2. Faster turnaround times: Disbursement in less than a
has not made as big a mark in lending. This has led
week.100% online application. Minimum documentation
to the rise of many online lending companies and non-
(KYC, bank statement, income tax return, VAT return).
bank lenders (Lendingkart, Indifi, Iending, Faircent, and
Use algorithms and sift through data to find hidden
New growth) that capitalise on the inefficient lending
insights in order to make lending decisions quickly. This
process of banks.
ensures fast turnaround.
The growth of these companies also demonstrates that
3. Superior credit evaluation: Use analytics and big data
customers are looking for more convenience, which
scoring to evaluate client’s business. Have supply-
digitisation can provide. The significant rise of non-
chain partnerships, which bring access to borrowers.
bank lenders has led banks to invest more in digital
Transactional data to aid underwriting.
technology, and form partnerships with them to retain
4. Lower operating costs: From application to collection
their positions as leading operators in the lending
(through electronic repayment) the entire process is
market. Fin-techs are increasingly gaining legitimacy,
digitised.
even with regulators, and are expected to gradually
5. Flexible loan structure: Repayments are structured, which suits the cash flow of the borrowers.
gain customer trust.
Lending Solutions by fin-tech Companies Lending
Business model
Capital float NBFC / SME loan market place
Product
loan size
duration
interest rate
Revenue stream
Working capital loan 1lac to 10mn to online seller
90-180 days
16-24%
Spread & fee
Term finance
1lac to 5mn
6 months to 3 years
16-24%
Spread & fee
Invoice finance
1lac to 10mn
30-180 days
16-24%
Spread & fee
lendingkart SME loan market place
Working capital loan
indifi
SME loan market place
Working capital loan
i-lending
P2P personal loan market place
Personal loan
25k to 0.5mn
6-36 months
12%-24%
Registration fee from borrower. Transaction fee from both borrower and lender
Faircent
P2P personal loan market place
Personal loan
50k to 0.5mn
6-36 months
12% -24%
Registration fee from borrower. Transaction fee from both borrower and lender
Neogrowth
NBFC
Working capital loan starting from to online seller 2lac Retailer with EDC/ POS machine
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Retail loan provided online by various banks Loan products
Axis bank
HDFC Bank
ICICI Bank
SBI
Home loan
Home loan
Home loan
Home loan
Two Wheeler/Car loan
Two Wheeler/Car loan
Car loan
Auto loan
Credit Card
Credit Card
Credit Card
Credit Card
Personal Loan
Personal Loan/ Loan against securities
Personal Loan
Personal Loan Loan against property Education loan
Lending game-changers The size of fin-tech companies in the Indian lending market may be insignificant, but the offerings they have are noteworthy. Going forward, these offerings could be game changers. NBFCs have already adopted this changing face of lending into their operations. Even banks have started disbursing some of their retail products online, which offer twin benefits of convenience to customers and lower underwriting costs for the lender. Incrementally, more than 50% of personal loans and credit cards are disbursed online and the underwriting costs are 70-80% lower than branch banking. Even the turnaround time has dropped – to a few hours from a few days in the past.
Non-traditional data gathering
Fin-tech companies believe in symbiosis Most fin-tech companies and banks in India do not believe the disruption theory. They believe that banks and fintech companies need each other’s support to encourage product innovation and provide commercially viable solutions to customers. • Banks need fin-tech companies to improve product delivery and customer experience, and enable them to not only manage increasing compliance costs, but also the risk of non-compliance. • Fin-tech companies need banks for better customer understanding, to manage regulatory risks, and to support continuous innovation. Mr K A Babu (Head Digital Banking, Federal Bank) calls his bank’s digital strategy 3As – Anywhere-Anytime-Any Device. He views digitisation as not just a cost-saving strategy, but also as a new revenue stream. He believes that in order to innovate, banks will collaborate with fintech companies and even invest in some of them in a quest to innovate.
Consumer behaviour and marketing analytics are
The business correspondent model
driving a sustainable competitive advantage in an era of eroding product differentiation, waning customer loyalty, and exploding volume and variety of data. Apart from pulling data from traditional sources such as civil data, bank statements, and verification,
• •
fin-tech companies are also gathering data in non-traditional ways – such as shopping patterns, academic records, and online footprints. Such data is going to make credit decisions more mainstream;
•
Introduced in India in 2006. Hailed as an innovative way of serving the ‘unbanked’ by allowing banks to reach them through a network of external agents. This model is very different from the conventional brick-and-mortar branch-based banking framework. It has seen varying degrees of success in India.
banks will embrace this approach soon.
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Suvidhaa point offering payment services
Banking with the underbanked – technology can disrupt micro finance The growing influence of technology provides
under
a secure, efficient, and cost-effective solution
assisted unsecured loan distribution may not steal
to the financial world. The much talked-about
a large chunk of the micro-finance market, but will
‘underserved’ segment at the bottom of the pyramid
result in margin compression, which can be negative
is still excluded from formal banking channels as
for micro finance businesses. Data analytics and
costs do not justify returns – the mathematics of high
customer’s financial transaction behaviour provides
product-delivery costs and low volumes makes the
insights into business opportunities for loan products.
risk-reward unfavourable. This model can provide
Technology assistance can improve banks’ outreach
strong competition to micro-finance businesses,
to hinterlands and create disruption in some of the
where lending rates are very high. In fact, banks are
established models such as micro finance.
pressure.
The
business-correspondent-
exploring this opportunity in a big way, as the yields in traditional banking products are continuously
1 6 GROUN D VI EW
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cost of each transaction at a branch is around “RsAverage 60 while with self-service it is as low as Rs 10” Suvidhaa
Sahaj
Suvidhaa, a PPI, acts as a business correspondent
Just like Suvidhaa, Sahaj (an associate company
for loan products for some large banks such
of Srei Infrastructure) provides digital services to
as Axis Bank. Its Chairman, Mr Paresh Rajde,
rural India through its 6,344 IT-backed common
strongly advocates a collaborative approach with
service centres (CSC) across West Bengal, Bihar,
banks, which can revolutionise loan products for
Odisha, Assam, Uttar Pradesh and Tamil Nadu.
the underserved. This model provides last-mile
Sahaj’s aim is financial inclusion; about 696 of its
connectivity through the agent-assisted model.
CSCs act as business correspondents for banks.
Strong customer database and state-of-the-art technology helps to underwrite unsecured loan products much faster.
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Digitising deposits Defending core competence Deposits and borrowings are any banks’
Important question –do banks require
raw material and a strong franchise in
so many branches?
these determines its ability to withstand competition. Providing a strong payments plan, as part of a comprehensive strategy for
Branches
are
vital
touch
points
for
customers. It acts as a point to on-board
digital banking, is therefore an imperative
the customer, cross-sell new products,
for any efficient and cost-effective deposit
and provides a sense of reliability to
franchisee.
the customer. Globally too, there are
Three factors have driven CASA growth of
contrasting examples – banks follow
late – electronic payments, internet banking,
varied strategies when it comes to building
and cards. The next wave of growth will
customer touch-points. On one end of
be driven by mobile banking. Banks have
the spectrum we have banks like Atom
embraced
deposit
and Fidor, whose strategy is branchless
products very well. Opening a savings
digitisation
in
their
banking; on the other, we have examples
account, to transactions in deposit accounts
of Wells Fargo in the USA, which believes
anytime, anywhere is a reality. Demand from
in the coexistence of both formats, even in
customers for anytime anywhere banking has necessitated the inclusion of self-service features in a deposit account, which has tremendously increased branch productivity and reduced costs. As per Federal bank,
a country where financial literacy is much higher. In the Indian context, banking penetration customer
is
still
ignorance
underdeveloped, about
financial
the average cost of each transaction at a
product is high, and physical presence
branch is around Rs 60 while with self-service
provides a great sense of reliability. In
(internet,mobile,or phone banking), it is as
such a scenario, coexistence of branch and
low as Rs10. As per State Bank of India, “A
digitisation seems to be an ideal strategy,
mobile banking transaction costs about 2%
especially for mid- to small-sized banks.
of the bank branching cost, 10% of ATMbased transaction and 50% of the Internet banking cost”
Banks run the risk of becoming redundant “if they do not adopt new technology”
1 8 GROUN D VI EW
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From branch-banking to neo-banking The changing phases of the industry As the banking industry goes through a digital evolution, there is a great shift in the way services are rendered to the customers. From only branch banking at brick-andmortar locations, banks are now transforming to a digital platform in order to save on personnel and infrastructure costs and to reduce reliance on service staff. In the US, large banks were, up until recently, consciously reducing the number and size of their branches, as they were adapting to the changing behaviour of their customers, who started increasingly using digital channels for banking. Despite large banks such as Bank of America, Merrill Lynch, JP Morgan Chase, and HSBC rationalising and reducing their
Wells Fargo’s balanced strategy, based on data This San Francisco-based giant
performance. This data suggests that
believes that banks need to leverage
in any given six months, 75% of its
on branch-banking services along with
customers visit a branch; this shows
branches, recent Federal Deposit
digital channels in order to effectively
that branches continue to add value
Insurance corporation (FDIC) data
reach out to customers and increase
to the overall banking experience.
the effectiveness of financial inclusion.
Another interesting aspect of these
Wells Fargo is trying to achieve this
footfalls is that a large chunk of them
by integrating technology between
been growing, given that these
are from ‘millennials’, who are usually
branches, mobiles, online banking
perceived to be tech savvy; but
large banks are setting up branches
apps, ATMs, and call centres.
apparently, they still visit branches to
in unrepresented metropolitan
Wells Fargo holds the view that branch
initiate their financial relationship with
cities. This is in contrast to the
banking continues to be an integral
the bank. Most of its competitors have
part of the services value-chain. In
been encouraging their customers
order to make rational decisions
to open an account through mobile
reveals that per-capita number of branches in the US have actually
generic view that digitisation in the financial services industry would
about branch expansion, it has
applications, but Wells Fargo has a
make branch-banking services
been continuously monitoring data
neutral approach as 85% of its new
redundant.
related to traffic/footfalls and branch
account sales have been through
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19
branches. Wells Fargo builds and refines its digital channels and uses them in conjunction with branch banking. It
A few examples of the revolution in the industry
does not treat this as an ‘alternate’
up. Started from scratch, it aims
platform. For example, the bank
to provide a truly innovative and
provides its branch employees with
differentiating customer experience
tablets, which communicate with
that offers a comprehensive suite of
nearby ATMs – the purpose of this is
financial products and services by
to serve customers in case they run
owning the entire infrastructure. The
into any problem while transacting at the ATM. Although customers have
Atom Bank is an example of a
been using the digital channel for
revolution in the banking industry
banking, branches continue to play
and it is challenging the conventional
a pivotal role in rendering the entire
set up of existing banks. The bank
range of services.
received its license in June 2015 and
Neo-banking surges ahead
became UK’s first bank to operate completely through mobiles. The bank has already introduced residential mortgages and by the end of 2016, it will roll out more products such as fixed savings, current accounts,
The banking space is now seeing a remarkable transformation in terms of neo-banking, in which
overdrafts, and debit and credit cards
bank adheres to two main principles of financial innovation: openness and community. Openness is the flexibility and agility that enables banks to create an extensive ecosystem of partners and capabilities, while also leveraging APIs to develop differentiating applications. Community is about bringing users together and solidifying a bond between the bank and its customers, as well as between customers themselves.
in a phased manner, which will all be
The bank is the primary entity in
serviced through the app.
the Fidor Group, which holds two additional entities: FidorTecS and
banks are just a click away, as
Fidor Payment Services. FidorTecS
there are no brick-and-mortar
is the development branch of Fidor
locations. One of the key driving
Group, developing, implementing,
forces for neo banking would be
and maintaining the fidorOS platform
tech-savvy customers who prefer not to visit branches, a higher
and its library of APIs. It employs
number of millennials in the
around 30 developers and has been
customer composition, and greater
a standalone organisation under
penetration of smart devices.
Fidor Bank since 2013. Fidor Payment
Neo-banking aims to simplify
Services, as a strategic business unit
online transactions, while reducing
within Fidor Bank, provides payment
overhead costs and passing on
services for more than 40 payment
these benefits to customers in the
methods worldwide. It is the exclusive
form of lower interest rates or
enabler of Fidor payment products
lower fee charges. On the flip side,
and transaction business. FidorPays
neo-banking poses few challenges
leverages the network to allow users to make payments between accounts,
in terms of large complex transactions, which may require to
Another example of newbanks is Fidor
transact with ‘crypto-currency’, and
be carried out through a branch,
Bank in Germany, which redefines
make real-time payments across the
which neo banks do not have.
traditional banking from the ground
globe.
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Wealth management: Fin-tech not yet disrupting, but making inroads Higher customer expectations, unsatisfactory wealth management services from banks, poor
Cross-selling revenue of banks
after-sale services, and lack of expertise has warranted the need for a specialised wealth manager. Globally, financial services saw de-
Fee income on bancassuance, Rs bn
% to PBT
bundling due to a need for specialisation. This
Axis
8.9
7.2
led to grooming of wealth management fin-tech
HDFC BANK
8.2
4.4
10.2
8.4
Induidns
1.5
4.3
a level of insulation from fin-tech disruption
KOTAK
2.9
5.8
due to two key factors – first, wealth and asset
SBI
4.6
3.4
YES
0.6
1.5
companies in India such as Policy Bazar, Coverfox, FundsIndia and Scripbox. Wealth and asset managers have, so far, enjoyed
managers operate in a highly regulated, formal market. As regulators apply continued pressure
ICICI
on increasing fee transparency across the industry, organisations with higher operating costs will
It is too early for fin-tech companies to disrupt
become less attractive to consumers. Winners will
banks’ wealth management businesses. The greatest
be wealth managers who are adaptable, agile,
likelihood in the near-term is the southward movement
and have low-cost models. Wealth management
in fees and commissions on these products. Wealth
products are ‘push products’ where customer
management and cross-selling account for 5% of
interaction is quite essential. A mere digital
profit before tax for private banks. Falling rates
platform may not suffice in a market like India.
may force banks to look out for more cost-effective
Moreover, the penetration level of life insurance
alternate models to remain relevant. Banks that rely
is just 3.9% and share of mutual funds / equity
heavily on cross-selling as part of their overall fee,
funds is just 2.7% of household savings.
could have a tough time.
Personal finance and retail investment by fin-tech
Coverfox
Nature of business
USP
Insurance aggregator
Expert advice and an informed, unbiased opinion Post sale service - renewal to claim process
Policybazar
Insurance aggregator
Expert advice and an informed, unbiased opinion Post sale service - renewal to claim process
Fundsindia
1 - 30 JUNE 2016
Mutual fund and deposit product aggregator
Advisory services & post sale service
G RO U N D V I EW
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DIGITISATION STRATEGIES OF BANKS
Collaboration with fin-tech, coexistence of physical and virtual As banks revaluate their core value propositions
risk of market adoption, they would garner a
and contemplate their digital strategies, they
reputation for innovation and industry leadership.
essentially have a choice between three strategic postures: 1. Followers They have the choice to track other banks’ progress and develop service models that can react to customers’ needs when a new concept
Most banks are comfortable adopting the ‘catalysts’ role…
stabilises. These banks can invest in competitive innovation centres, picking up ideas after they hit
Traditionally, most financial services incumbents
the banking market.
have been comfortable partnering or playing the
2. Catalysts
role of catalyst in their own industry – especially where there is an opportunity to share processes
Under this strategy, banks can invite others
or services that are considered ‘non-core’, and
to innovate while they ensure client security,
which help all collaborators either reduce their
account management, and system stability. One
costs or create new market opportunities. There
way of doing this is by opening the bank’s IT
are many examples of such partnerships in India
platform to a select community of developers, or
– such as CIBIL, where various banks collaborated
by allowing others to provide services under their
to create an entity that provides data about a
client platform.
borrower’s credit history. It helps loan providers
3. Innovators
manage their businesses or help consumers secure credit faster and at better terms. The use
In this strategy, banks can seize the opportunity
of CIBIL’s products has led to a massive change in
to be leaders, competing on innovation not only
the way the credit lifecycle is managed by both
with other banks but also with digital leaders, on
loan providers and consumers. ARCIL is another
banking and non-banking services. Such leaders
example – it helps banks by acquiring stressed
would stand out as delivering comprehensive
assets, subsequently reaching a resolution or
digital solutions, and while they would bear the
undertaking a recovery exercise.
Most banks in India believe that tie ups or “collaboration with fin-tech firms would be an appropriate strategy to embrace digitisation” 2 2 GROUN D VI EW
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…but in the future, collaboration will need to go a step further
List of bank tie up with fin-tech companies Banks
Fin-tech Companies
Key functions
HDFC Bank
Senseforth Technologies
Artificial Intelligence
Tagnpin
Customer engagement)
Net Vigil Software
QR code based payments)
Bugclipper Technologies
Quality assurance
Tapits Technologies
Biometric payments
MSWIPE
Mobile POS solutions provider
MPAY
Mobile POS solutions provider
appropriate strategy to embrace digitisation.
NOVOPAY
Consumer payment application
There are several examples: ICICI Bank has
Prizm Payments
Mobile POS solutions provider
Vayana Network
End-to-end digital invoicing and payment solution
Fastacash
Multi-social payment app
Chillr
Smartphone application for P2P money transactions
Safe 2 Pay
A point of sale-free payment system
Taptis Technology
A biometric payment company
Tagnpin
Marketing and customer engagement tool
EZETAP
Mobile POS solutions provider
Paytm
Online and Mobile wallet
Bank Bazzar
Online financial product aggregator
PayPal
Digital payments company
Paytm
Online and Mobile wallet
Eko India Financial Services
Prepaid wallet service
Ultracash Technologies
Payments processing through sound waves.
Eko India Financial Services
Prepaid wallet service
Click & Pay
Mobile-based payment solutions enterprise
Eko India Financial Services
Prepaid wallet service
PayU
Online payment solution
In order to maintain and grow value in these times of change, established players will have to keep looking at collaborating more closely with those in different industries and outlooks. Most banks in India believe that tie ups or
Axis Bank
collaboration with fin-tech firms would be an
tied up with FinoPaytech, State Bank has tied up with Reliance JIO, Kotak Mahindra Bank has tied up with BhartiAirtel. The increasing number of traditional banks tying up with payment banks or fin-tech companies is a
HDFC Bank
testament to the collaborative approach.
Coexistence of physical and virtual branches in India
SBI
Due to financial and social reasons, the concept of branch banking in India cannot be done away with. While setting up and running
ICICI Bank
a physical branch is undoubtedly expensive, the situation in India is not as bad as it is in the US or Europe. In the last few years, Bank
Yes
of America has reduced its branch strength to 4,789 from 5,328 while JPMorgan Chase slashed its branch count by 2% to 5,504. For both organisations, the savings were substantial. While BofA’s workforce came down by roughly 15%, JPMorgan Chase pruned its staff strength by 6,000, leading to savings
IndusInd Bank
worth US$500mnin H1 2015.
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As per State Bank of India, “A mobile banking transaction “costs about 2% of the bank branching cost, 10% of ATMbased transaction and 50% of the In ternet banking cost” Banks in the US or in Europe are facing the heat of dwindling spreads in their intermediation businesses. Moreover, high penetration of smartphones and financially literate customers provide opportunities for fin-tech companies to disrupt the system. This is not the case in India. Another important differentiator is social – in India, people would not be inclined towards trusting a ‘faceless’ bank. They would want to know who their banker is. Therefore, the idea of not having branches and physical presence for assisting customers may not be a wise strategy for this country. However, despite India’s peculiar predispositions, the fact is – the face of traditional branch banking is already seeing a change and will continue to evolve. There can be several innovative formats – from being ‘pure digital’ or ‘pure traditional’, branches could end up being mixed models– where they offer the best of both. For instance, a ‘single-employee’ branch model could work (especially for smaller coverage areas) where most services would be digital, but a person would always be available for support and assistance. Bank branches are not going to totally disappear – but they are going to transform. Multi-formats would most certainly be the way ahead. Here are two examples of co-existence strategies: •
New-age private bank IndusInd believes in the co-existence of the physical and virtual. Physical branches are essential to ‘on-board’ a customer and cross-sell a product, while virtual branches take care of the transactional needs of a customer by providing them the option of anytime and anywhere banking.
•
DCB Bank has initiated an aggressive branch expansion drive. It plans to add 150 branches in two years, thus doubling its network. This bank believes that a physical footprint is essential to on-board customers and cross-sell new products. From a customer’s perspective, DCB believes that the physical branch’s presence provides a sense of reliability and trust, which is a key factor in banking.
Bank branches are not going to totally disappear “– but they are going to transform. Multi-formats would most certainly be the way ahead” 2 4 GROUN D VI EW
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C H A L L E N G E – E VO LV I N G T H E D I G I T I S AT I O N C U LT U R E
Banks can attract the digital talent needed to evolve their offerings, but do they really have the culture?
Internal structures and processes can often prove to be restrictive, making it hard to innovate from within. Instead, many banks are looking at how they can work in conjunction with external companies by using ‘lab’-type formats – empowering digital teams to develop, experiment, and evolve propositions before integrating them back into the larger corporate structure in a manner that is aligned with the wider digital strategy of the business.
2. Design a digitisation roadmap. Customers should be at the centre of this roadmap. The design should include tactics for using digital technologies to strengthen a bank’s understanding of existing and future customers. In this model, fostering participation of leaders from all ranks, by designing a ‘digital business value tree’ and considering potential digital operating models is important. In this roadmap, technology and skills required to harness the
Rather than piloting a project and then facing
true power of digital assets to deliver the desired
insurmountable obstacles, these experiments
customer value has to be demonstrated.
provide ‘risk-free play grounds’ to try out new technologies and provide the company with
3. Digitise the business model.
the option of mainstreaming them only if they
In this approach, it is necessary to make the
become viable. This significantly reduces the
right choices about customer-value proposition,
risks associated with large-scale changes and
resources, profit formula, and performance
increases the chances of delivering a favourable
metrics, and to nurture capabilities and culture
outcome.
needed to support the business model and
Major consulting firm Accenture suggests following this ‘path’ to profitable digitization: 1.
Awareness
and
ownership
around
digitisation.
transform digitisation into a driver of profitable growth. It is clear that the digitisation journey will not be easy. However, by breaking it down into stages and taking a disciplined approach, Indian
Throughout the organisation, people should
businesses can go beyond merely doing better.
understand what digitalisation is and what
Ultimately, they can transform their businesses by
advantages it offers – this fosters a sense of
activating new sources of revenue that take full
ownership about this process.
advantage of India’s rapid digital growth.
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I N
A
B O X :
A P P - O N L Y
B A N K S
BankMobile • This mobile-only bank was set up in 2009 in the middle of the financial crisis. It quickly established a very different approach to conventional banking, encouraging a two-way conversation about what features to offer and how to improve things. • It was very early into the whole social finance thing too. • Customers can sign in to their accounts via Facebook, but Fidor stresses that the social interaction is all about listening, and not just a gimmick. It’s even launched a ‘like’ interest rate: the more likes the bank gets on its Facebook pages, the higher the interest rate goes. • Last year, Fidor proved its innovative quality again when it teamed up with Ripple to use blockchain-type protocol to power money transfer. The bank has about 300,000 users in Germany, and is also live in Russia. It’s now going to new markets like the UK and US.
• Entirely digital, but not entirely independent, Hello bank!was created by Europe’s BNP Paribas Group in 2013 at a reported cost of €80mn, and is now live in France, Italy, Belgium and Germany. • The mobile-only bank provides a range of dedicated apps supported by extendedhours access to an account manager by video call, online chat, or phone. It offers a fee-free current account and even a savings account that comes with an Amazon voucher for €100. • The app also includes a lot of social and gamification elements – savers can receive contributions from friends and family members through social networks; and there are tools that provide visual representations of an individual’s financial situation. • The bank has said that it want to acquire 1.4 million customers by 2017.
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• This Berlin-based mobile-only bank received US$2mn in funding last year and is now live (by invitation) in Germany and Austria. It started out as a pre-paid card for kids, but changed its approach when it saw just how many adults sought it out. • Its service is based around an app with a linked Mastercard. • It also supports P2P payments to other mobile users and displays charts to help regulate spending. • Everything is customisable – a user can set limits or even disable payments. Interestingly, it charges no extra fees for paying for overseas goods in foreign currencies.
• US-based BankMobile’s parent, Customers Bank, have 1.2 million student checking accounts. • BankMobile aims to go after Millennials and be the ‘Uber’ of banking. Everything is done through the app, which is powered by Malauzai Software. • Signing up for an account can be done in five minutes with a photo capture of official ID. Bills and cheques can also be photo scanned. • There’s a Venmo-style P2P transfer feature, and customers get an ATM card they can use at 55,000 locations, but they can switch it off from their app as an added security measure. • BankMobile doesn’t charge any fees on checking and savings accounts and offers a personal line of credit (max value of US$5,000).
• Its banking partner is Wirecard Bank, which holds all the appropriate licences.
• The firm says it’s targeting 25,000 customers in a year and 250,000 in five.
• Simple was one of the first pioneers of digital-only banking. It made such an impact that it was sold to Spain’s secondlargest bank, BBVA, in February 2014, for a US$117mn. • By that point, US-based Simple had 100,000 users. • Some of its eye-catching ideasincluded the ‘Goals’ tool, which lets users designate money for desired purchases, and Safeto-Spend, which reveals how much is available to spend without affecting longterm goals.
• France’s AXA Banque responded to the rise of mobile-only banks by starting its own – Soon – in June 2013. • The new bank revolves around a radically re-imagined interface. The main emphasis is on past and future spending, which is illustrated by a vertically scrolling dial. In this way, the app also encourages users to think responsibly about their outgoing. • It also embraces the social side of finances, giving users the chance to take pics of what they’ve brought and reveal them to friends via social media.
• US-based GoBank competes closely with others such as Moven and Simple, but with one big difference – customers can deposit cash at branches of Wal-Mart. • The bank was jointly created by prepaid card pioneer Green Dot Corporation and retail giant Wal-Mart, and launched last year. Shoppers can sign up for the bank in a branch, and deposit cash there too. Otherwise, the bank is entirely mobile. • There are no minimum balance fees, monthly fees, or overdraft charges, provided customers have a minimum of US$500 in the account. Account holders can also use 42,000 ATMs without incurring any fees. • As with other mobile banks, users can send P2P payments, set up alerts, manage their money and gauge spend against income in a user-friendly ‘Balance Bar’.
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• The mobile-only bank was launched in 2011, well ahead of the competition, and soft launched in mid-2013. • Its features include some of the ideas that every mobile-only bank now deploys – realtime spending alerts, budget visualisations, and linked debit card. Last year, Moven bagged an US$8mn‘Series A’ led by SBT Venture Capital. It is now targeting an international rollout. • In January, Moven confirmed it would roll out wearable banking on the Moto 360 smart watch. It was an example of the US firm’s desire to lead from the front in disruptive banking.
• UK-based Atom was formed in 2014 by Anthony Thomson, the man behind Metro Bank, and Mark Mullen, the former boss of First Direct. • Atom is a low-cost app-based bank. It uses biometric security: face and voice recognition (with fingerprint ID coming soon) to log-in to its app. • Based in Durham, Atom Bank has no branches or vast call centres. All contact with this bank is via an app, through which customers are able to talk to its 30-member service team. • It plans to launch current accounts, loans, and mortgages by the end of 2016.
• A little different from the other banks in the list:Osper is a UK start-up targeted at children. This mobile-only bank service is built around an app and linked prepaid debit card (from MasterCard). • Parents can top up the app with funds and set parameters for how it is used. They can use separate logins too. Kids can use the card for physical spend and the app for digital. • Osper was a ‘graduate’ of the TechStars accelerator and closed a US$10mn (£6mn) funding round last year, led by London’s Index Ventures. The firm has some competition – it is very similar to another UK startup, GoHenry.
Some of the flourishing fin-tech companies globally Name
Sector
Key People
Description
Funding Circle (US)
SME lending market place
Samir Desai • Funding Circle was created with one big idea – to revolutionise the out-dated banking system and secure a better deal for everyone • With offices in the UK, US, Germany, Spain and in the Netherlands, it is the world’s leading marketplace exclusively focused on small businesses, providing a platform where investors can browse businesses that Funding Circle has credit-assessed and approved for lending.
Founded in 2010
• Once approved, businesses post their loan request on the Funding Circle marketplace. Here, investors choose which type of business to lend to, the amount of money they wish to lend, and the interest rate they want to earn. Wealthfront (US)
Wealth management
Adam Nash
• Wealthfront makes it easy for anyone to get access to excellent, long-term investment management without the high fees or steep account minimums.
Founded in 2011
Kreditech (Germany) Founded in 2012
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• An automated investment service that combines financial expertise and technology to provide sophisticated investment management at prices that are affordable for everyone.
• Its mission is to provide access to the same high-quality financial advice offered by major financial institutions and private wealth managers (such as tax-loss harvesting), without high account minimums or costs. Retail banking
Alexander Graubner Muller
• Kreditech is a technology company that delivers a range of custom-tailored financial services with a focus on under-banked consumers across the globe. • It uses big data, proprietary algorithms, and automated workflows to acquire, identify and underwrite customers within seconds. • Automated processes combined with self-learning algorithms ensure fast and convenient customer service, minimising cost and human error, while continually improving by incorporating new customer data.
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Some of the flourishing fin-tech companies globally Name
Sector
Key People
Avant (US)
Consumer lending market place
Al Goldstein
Founded in 2012
Description • Avant is a fast-growing marketplace-lending platform that is lowering the costs and barriers of borrowing for consumers. • Through big data and machine-learning algorithms, the company offers a unique and highly customised approach to streamlined credit options. • At its core, Avant is a tech company that is dedicated to creating innovative and practical financial products for all consumers.
ZhongAn (China)
Property Insurance
Jack Ma / Pony Ma
Founded in 2013
• ZhongAn is an innovative online property insurance company. It uses big-data technology to assist product design, automatic underwriting, auto claims, precision marketing, and risk management. • It is the first company in China to be issued an internet (online) insurance license. The company is a joint venture between Alibaba Group Holding (an e-commerce company), Tencent Holdings (an online gaming and social networking company), and Ping An Insurance. • ZhongAn offers a wide range of online insurance services to the Chinese market, catering to all socio-economic groups, with a major focus on travel, accident, and health.
Oscar (US)
Health insurance
Joshua Kushner
Founded in 2013
• Oscar is focused on using technology to simplify the entire healthcare experience. • A team of technology and healthcare experts looked at the current state of the US healthcare system and were frustrated by the horrible consumer experience. In response, they decided to reinvent how healthcare is delivered. • They are reinventing how to manage care, process medical claims, control healthcare costs, and provide transparency. • All this complexity will be hidden behind an easy experience for its members. • Oscar is making the healthcare system simple, smart, and friendly.
Qufenqi (China)
Consumer durable finance
Founded in 2014
Min Luo (Co-founder and CEO)
• Electronics retailer that offers monthly instalment payment solutions to students and professionals in China. • Primarily offers smartphones, laptops, and other consumer electronics online, allowing customers to choose their own down-payment option and the period for making regular monthly instalments. • Customers have to close instalments within two years of the purchase. • The business model is tailored for students and young white-collar workers, with the final price and monthly required payments shown transparently on the product page.
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In an extensive interview with Mr Mangu Singh, the Managing Director of Delhi Metro Rail Corporation (DMRC), he talks about the evolution of the Delhi metro network, the execution challenges it faced, and also about other metro projects in the country.
Mangu Singh MANAGING DIRECTOR
Delhi Metro Rail Corp
BY VIBHOR SINGHAL Q: DMRC is currently implementing phase-3 of the
central Delhi, we have taken a quantum jump in technology
Delhi Metro, which will make it the fifth largest metro
– we have used new coaches, signalling systems, and
network in the world. For a network that started just
automated driverless trains. (Phase-3 is essentially phase
15 years ago, it has come quite far. What are the key
1 + 2 put together.)
features of this phase?
In phase 3, 90km will be ‘unattended train operations’ –
Phase-3, with its extensions, involves constructing about
where there is no human intervention. Trains operating on
160km of metro network in one go – something that
phase-1 and 2 lines cannot be shifted to driverless trains
probably nobody anywhere in the world has done before.
because that will require technology upgradation. Phase
If you remember, phase-1 was executed over seven years
3 will decongest stations like Rajiv Chowk and Kashmere
and three months while phase-2 took less than five years
Gate. With this phase providing more interchange options,
and covered 125km. In Phase 3, apart from just catering to
congestion at these stations will reduce significantly.
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Q: What is the current passenger traffic and where do you expect it to go after phase-3 is complete?
the site and just placed them on the piers. In phase-3 our focus was primarily on reduction of labour
Current passenger traffic is 2.8mn per day. In 2015, we had
as skilled labour availability is very limited. In the harvesting
crossed 3.2mn in a day. After phase-3 is done, we expect it
season, especially, we did not get any labour; so, we
to rise to 4mn.
mechanised many processes.
Q: What will phase - 4 be about and what is its current status?
Q: DMRC has also been a consultant to all metro projects in the country. How has your experience been with those
The DPR for phase - 4 is ready; it will comprise of 103km and
projects in terms of interference by state governments,
will be concentrated in the central part of the city. It will consist
pace of execution, etc.?
of (1) Azadpur to RK Ashram – covering Sadar Bazar, Karol Bagh – the third line for Old Delhi and (2) criss-crossing from Inderlok to Indraprastha via Paharganj and ITO among others. These two lines will be completely underground and there will be two more lines. Phase-4 will provide more interchange stations. Execution on this phase will start anytime now. We will begin the preliminary work even before funding is secured.
DPRs and first-section tenders of all metro projects were finalised by DMRC. We also built some of these metros (Jaipur and Kochi). We built Jaipur within three years and Kochi in less than four years – we have recently started trials in Kochi. DMRC’s track record has been great. We are also in the process of building Vijaywada and Mumbai Metro 2A. Whenever DMRC takes a new project, we take full
Q: We have seen DMRC slipping into the red over the last two years even though it is still profitable operationally. While this is because of the expansion, do you see DMRC returning to profit after phase-3 is over? As you said, we are still profitable at the operational level; however, our margins are shrinking. DMRC has always been a lean organisation; earlier, we had set a target of employing 40 people per kilometre, which we are further tightening
responsibility for all the decisions about finalisation of tenders, management of contracts, and decision about developers. State support is always needed in areas such as land acquisition, and law and order. The DPR is also prepared in consultation with the state government authorities. Our reputation has resulted in full support from government agencies. Be it Jaipur or Kochi, we have had a complete free hand. We expect this in Mumbai and Vijaywada too.
to 34. We are constantly trying to improve this parameter. Staff cost (salary) is not in our hands as it is decided by the
Q: The DPRs for Chandigarh and Ludhiana prescribe the
government, but we can control the number of people that
use of LRT (Light Rail Transit). How do you see that as an
we employ. We are also concentrating on operational- and
option, especially for tier-2 cities in India?
energy-efficiency to reduce costs.
Fundamentally, there is no difference between LRT and MRT. In Europe, LRT means trams that run on surface. LRT is nothing
Q: DMRC has always been at the forefront of adopting
but a metro – if you run trains at lower frequencies or with
new technologies (incremental launching method, NATM).
lesser coaches, it becomes an LRT. All these terminologies are
Would you like to highlight anything on these lines in
interchangeable.
phase 3?
If you expect lighter traffic, you can have lighter civil structures
Tunnelling is one subject where bookish knowledge doesn’t
– to run fewer trains with lesser coaches. Stations become
work. Every project has something new. For example, in
small, but it is still a metro – there is no fundamental difference.
phase-3, TBMs (tunnel boring machines) were not working
Everything else including power supply remains the same.
in a few places, hence we improvised. We don’t expect
Only if coach sizes are different, then you have a fundamentally
any significant new technology adoption ahead; it is more
different model, but that will give you a maximum saving of
learning-based, gained through experience.
10%, not more than that. However, these coaches are not
Let me give you another example – in phase 3, we used ‘U girders’. We realised that girders that were being cast in casting yards, in a factory environment, were superior to ones assembled at the site. So we transported pre-fabricated ‘pier to pier - U girders’ that were fabricated in casting yards, to 3 0 GROUN D VI EW
upgradable to a higher capacity in the future. So, you cannot run a five-coach train on infrastructure that was designed to run a three-coach one – this is because the power supply and station size would not be adequate. You can only increase the frequency.
1 - 30 JUNE 2016
Q: What about monorail? Monorail is completely different. Its only selling point is that
sufficient delivery capabilities? What is a concern in this area according to you?
you can build it along sharper curves, and connect places
The Delhi metro project was so large that players from
that have narrow roads. But the experience is highly inferior
over the world worked on it; we never had any problem of
because of single wheel. Another argument is that since the
capability deficiency. The problem is that the window of work
structures needed for monorail are sleek, they do not obstruct
is very small – we are building 160km over 3-4 years – they
the skyview. However, the modern concept of life saving
ALL have to work in that time frame.
/ rescue system for passengers means that the certifying
Since the employment of contractors is for a limited period
authorities will insist on a walkway along the monorail
only, once execution on a specific stretch is over, the
corridors for passenger evacuation, thereby defeating the
developer has to wait for the next contract to be awarded.
skyview argument – and we are back to square one. We do
Resources are limited. Even if we want contractors to grow
not consider monorail a proper solution for urban transport.
and become big in this domain, it is difficult, as this is not a
The biggest problem with monorail is the proprietary
regular job for them. They cannot be asked to bring in huge
technology. Therefore, if you want to extend a monorail even
resources in terms of the viability of their contracts.
by 5km, you have to go to the same rolling-stock vendor who
Most of the tunnelling work is done by international players.
has supplied the earlier phase. Even for existing rolling stock,
In phase-2, we saw Indian players taking on important
spare parts can be procured only from the same vendor. On
roles, although in JVs with international players, mainly for
the other hand, metro technology is so open that you can
consumables and spare parts for TBMs that are not available
add as many vendors as you like with the same specifications.
in India and therefore easier to procure with a partner.
Q: Our interaction with many rolling stock manufacturers
Q: In your opinion (personal or professional), does
suggests that the tender-award process in India is quite
investment of this magnitude in metro projects make
different from global norms. Globally, tenders are
sense, especially for tier-2 cities that do not require
awarded on LCC (lifecycle cost), but in India we seem to
metros today?
use only upfront purchase price as the bidding criterion; the fear is that this renders companies with superiorquality coaches (which would be initially expensive, but with lower maintenance costs later) unable to win many contracts. What are your views on this?
If you have the scope to widen roads, there is no question, right? You should do it! Most of our cities – even tier-2 cities – have populations of more than 4-5 million. They are not tier-2 cities in the global sense of the definition. My point is, if you delay making metros for these cities today, and
This is not 100% true. Different practices exist worldwide.
start building them after 10 years, it is just going to be more
For the first five years, rolling stocks do not require any
costly and more difficult to build. I think it is more prudent
major maintenance, largely because specifications are very
to plan a better public transport system today, as the return
stringent. Metros like those in Russia go for complete lifecycle
to society is much higher in terms of man-hours saved, and
cost, but having five or ten years does not make sense
lesser pollution and fuel consumption.
We do not include maintenance cost, as we believe that the
You see, we need to move to an ecosystem where public
vendors’ costs will be much higher than our departmental
will not mind paying for high-quality infrastructure. However,
cost. Our maintenance would be much cheaper.
we have made a system where we don’t charge people
In the last tender for Phase 3 – we included energy consumption
adequately for obvious reasons. Still, our cost of construction
in the bidding process for rolling stock. Anybody proposing
is 50% lower than most metro projects across the world, even
inferior energy consumption was loaded with a penalty on
Kuala Lampur and Shanghai Beijing. While the investment
the submitted bid, and the winner was decided on this basis.
might appear huge in absolute terms, it is still much less
This is going to result in significant cost saving as energy cost
when compared globally.
is 40% of our total operational costs.
Overall, I believe that investment in metro projects has many more tangential benefits than the ones that are easily visible.
Q: How has your experience been with developers
If you include them all, these investments are a very small
– foreign and domestic? Do Indian developers have
price to pay.
1 - 30 JUNE 2016
G RO U N D V I EW
31
Q: Could you talk a bit about Bombardier’s global operations? Bombardier is a Canadian company, headquartered in Montréal. In FY15, we posted revenues of US$ 18.2bn. We are the best in class in the transportation industry with 61 production and engineering sites in 28 countries, and a one-
Harsh Dhingra CHIEF COUNTRY REPRESENTATIVE, INDIA
Bombardier Transportation
stop solutions provider for sustainable modern mobility in the 21st century. We move millions of people every day in countries around the world; today, over 110,000 Bombardier
BY VIBHOR SINGHAL
rail vehicles operate globally. As a global leader in rail technology, we have significant international experience in manufacturing, engineering, technological innovation, services and fleet management – and we plan to bring all of these aspects to India. Q: How about Bombardier’s India operations? Could you
Mr. Harsh Dhingra, Chief Country Representative, India, Bombardier Transportation, takes GV
tell us about those?
through his company’s journey
India is one of the world’s most important railway markets
in India, its operations here, and
for us. In India, we have a well-established manufacturing operation. Additionally, we have engineering capabilities and a supplier and employee base, which consists of over 1900 highly skilled employees. We see huge opportunity in India what with Mass Transit systems planned in over 50 cities by 2050, the modernisation of the Indian Railways’ network, and
talks about the opportunity he sees in the Indian rail segment (railways and metros).
plans for semi high-speed and high-speed trains. In India, we have a railway vehicle manufacturing site and bogie assembly hall at Savli near Vadodara in Gujarat state. Our propulsion systems manufacturing facility is also in Vadodara at Maneja. We have a rail control solutions centre for project delivery and product engineering, and an information services hub near Gurgaon. And we also have an Engineering Centre in Hyderabad. In 2007, we invested ~€ 33mn in a state-of-the-art railwayvehicle manufacturing facility at Savli in Gujarat. Overall, we have invested ~US$ 100mn over the last two decades in Indian manufacturing sites, people, engineering, the local supplier network, and in proven technologies. We are actively contributing to the ‘Make in India’ program by delivering rail vehicles, products, and solutions that are developed locally, for both Indian and foreign markets. We also support the Indian government’s vision on ‘Skill India’ with locally-grown talent now delivering projects, as well as the ‘Clean India Movement’ by regularly arranging clean up drives in Vadodara. Bombardier truly incorporates “Make in India for India” and “Make in India 3 2 GROUN D VI EW
1 - 30 JUNE 2016
“I appreciate the efforts of Bombardier Transportation to invest in India through the FDI route. We acknowledge the contribution of Bombardier in supporting India’s “Make in India” and “Skill India” programme by producing trains for India and for exports from India” – Mr. Narendra Modi, Honourable Prime Minster, India. at a meeting with Bombardier officials in May 2016
for the World”. Q: How has your relationship been with Delhi Metro Rail Corporation (DMRC)?
vendors to set up production facilities, within Gujarat around our sites. This has increased the local content considerably from the time manufacturing started at the site in 2008. Currently the local content is at around 70%.
Bombardier is the Delhi Metro’s largest supplier of
This means an increasing amount of our product is truly
signalling systems and one of its largest suppliers of rolling
Indian, with components available in INR, and not subject
stock with more than US$ 1.2bn worth of orders placed
to the volatility of international currency markets.
since 2007. We have delivered 614 BOMBARDIER MOVIA metro cars and recently we have received an additional order of 162 cars from DMRC – this makes it one of the
Q: What is the competitive landscape like in this segment?
largest operating fleets in the world for Bombardier. We
In terms of manufacturing facilities, three companies
have also delivered signalling solutions for more than
have a base in India – Bombardier, BEML, and Alstom.
120km track length for Lines 5, 6 and 7.
Along with these companies, we compete with Korean,
Q: What has your relationship been with Indian Railways (IR)? Bombardier’s long-standing relationship with IR began
Japanese, Chinese and a host of other European players in the Indian rail market. Q: How have exports been from your Indian factories?
in 1993, with a design-and-build contract for electric
Our Savli site has developed extensive export-oriented
mainline passenger and freight locomotives. We now
activities. We are currently supplying bogie components
supply propulsion equipment to IR for locomotives. In
for Adelaide EMUs, Victoria trains, Riyadh Metro and
June 2016, we completed in-house production for the
São Paulo monorail and 75 six-car trains with bogies
supply of propulsion and electrical equipment to Mumbai
for Queensland New Generation Rolling stock (QNGR)
Railway Vikas Corporation (MRVC) for 72 twelve-car trains.
project. Vehicle assembly and bogie manufacturing for
Q: What is the potential opportunity in India, in the metro segment, over the next five years?
QNGR is taking place at the Savli facility while the Maneja facility is supplying a portion of the propulsion equipment. Three six-car trains have been delivered to date and they
Over the next 5-7 years, various cities in India will procure
are undergoing testing at our Wulkuraka Maintenance
approximately 3000 metro cars and 20 signalling lines. The
Facility in Ipswich, Australia. These trains have travelled
Indian government expects 50 cities to have a population
more than 10,500km by road and sea from Savli to the
of over 2mn each by 2050, and is encouraging them to
Port of Brisbane.
develop mass transit systems. This will generate demand for urban transit solutions, in which we excel. We are focused on projects that we consider strategic with long-term prospects for our operations in India. We are closely pursuing various metro projects in the cities of Delhi, Ahmedabad, Mumbai, Nagpur, Pune, Vijayawada, Vizag, and Bengaluru, along with light rail projects in Kerala state. Q: How much localisation of technology have you achieved at your India plant?
Q: Have you seen any changes with the new government at the centre taking charge since 2014? The Indian government, formed after the 2014 general election, is actively pursuing a long-term vision for sustainable and stable railways in India. Its ambitions are huge and focused, with emphasis on improving safety, expanding rail infrastructure, increasing track capacity, reducing congestion, raising passenger comfort levels, technological innovations, and faster train speeds. Rail is considered a significant engine of inclusive growth
Bombardier’s investment in Gujarat has attracted global 1 - 30 JUNE 2016
G RO U N D V I EW
33
for India, with the potential to contribute up to 2% of GDP, compared to current 1% levels. To maintain historic levels of national growth at 7-8%, railway needs to grow by ~9.5% every year. This will create new jobs, save energy, and improve the environment, while moving people, raw materials, and goods more efficiently nationwide. Q: Where will the money to transform India’s rail transportation come from? The Ministry of Railways has outlined its vision of railways becoming a key provider of connectivity and enablers of economic development, with a proposed US$ 125bn investment over the next five years (2014-2019).
which is a welcome introduction for the commuters. Driverless technology has two parts – rolling stock and signalling, which have to be properly interfaced. For the Phase-3 of the Delhi Metro, 60% of signalling has been done by Bombardier, whereas trains are supplied by Rotem. Q: It has been often cited that standardisation of contracts/specifications is required in India – do you agree with that? Yes, standardisation helps in reducing costs. The Indian market is maturing; things are moving towards standardisation, and we strongly support this. We have also been recommending that the authorities change the
During its initial days in office, the government introduced
bidding parameter to LCC (life-cycle cost) from acquisition
a plan for 100% FDI in the railways. In all, 17 areas have
cost – this will help bring in international practice of
been identified where industry players can invest up to
procurement.
100% from which IR expects to collect around US$ 13bn.
Q: In its last Phase 3 bids, DMRC included a penalty
In funding mass-transit systems, both the state and central
for energy efficiency. How was that received by the
governments contribute ~20-25%, while the rest is funded
industry?
by outside agencies such as Japan’s JICA, Germany’s KfW, the French AFD, European Investment Bank, and Export Import Bank of India.
Yes, the DMRC had proposed levying a penalty in the bid on energy efficiency. Energy efficient products are always preferred and I am sure that the industry welcomes it.
Q: Are you looking to bid for Mumbai Line 3 (MM3);
The understanding on evaluation methodology amongst
what is the timeline that you’re expecting for it?
supplier and buyer is a key.
We are interested in bidding for MM3 for Rolling stock
Q: What is opportunity for a player like Bombardier
and Signalling contracts. We understand civil contracts for
from freight corridors, being developed by Indian
MM3 will be awarded soon. The RFQ for rolling stock is
Railways?
already out and we expect RFQ for signalling shortly. We expect contract finalisation by Q2/2017, with supplies to be made in 2019.
If you see the current Indian Railways network, the average speed of passenger trains on “A” routes (7,000-8,000km, connecting important cities), is very low, due to movement
Q: Have tenders been invited for Phase 2 for the Jaipur
of freight trains. Freight trains move at ~25km/hr while
metro?
passenger trains move at ~40 km/hr (max 75km/hr). With
There are ongoing feasibility and alignment studies for Phase 2 of Jaipur. Once we have more clarity on Phase 2 with detailed specifications, we will be able to comment further. Q: What is the scope of driverless trains, which will be used in DMRC Phase 3? Does it require superior technology? Who, apart from Bombardier, has that
DFC in operation, the freight traffic will migrate to DFC from the “A” routes. This will increase freight movement speeds to 80km/hr and decongest the “A” routes. Hence, IR can not only introduce more passenger trains on the “A” routes, but can also increase their average speeds. This migration will create demand for locomotives, coaches, semi high-speed trains, as well as wagons.
technology? The driverless technology goes back 40 years – Bombardier was among the first companies to start implementing this technology in 1983. The key advantage of driverless technology is that it brings down the headway to 90 seconds from the current levels of around 2 minutes, 3 4 GROUN D VI EW
1 - 30 JUNE 2016
Indian Economy – Trend Indicators Monthly Economic Indicators Growth Rates (%)
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
IIP
4.8
2.5
3.0
2.5
4.2
4.3
6.3
3.7
9.9
-3.4
-0.9
-1.5
2.0
0.1
PMI
52.4
51.2
52.1
51.3
52.6
51.3
52.7
52.3
51.2
50.7
50.3
49.1
51.1
51.1
Core sector
2.3
-0.7
-0.4
4.4
3.0
1.1
2.6
3.2
3.2
-1.3
0.9
2.9
5.7
6.4
WPI
-2.1
-2.3
-2.4
-2.2
-2.1
-4.0
-5.1
-4.6
-3.7
-2.0
-0.7
-0.9
-1.0
-0.9
CPI
5.4
5.3
4.9
5.0
5.4
3.7
3.7
4.4
5.0
5.4
5.6
5.7
5.3
4.8
Money Supply
11.2
10.8
10.8
11.0
11.0
11.5
11.3
11.0
10.9
10.7
11.0
11.1
11.3
10.3
Deposit
11.2
10.7
10.7
11.5
11.4
11.8
11.9
11.3
11.1
10.4
10.9
11.1
11.0
9.9 11.3
Credit
7.2
8.7
9.2
8.8
9.5
9.4
9.0
7.5
9.0
9.8
11.1
11.4
11.6
Exports
-13.3
-20.8
-14.0
-20.2
-15.8
-10.3
-20.7
-24.3
-17.5
-24.4
-14.7
-13.6
-5.7
-5.5
Imports
-14.7
-14.2
-7.5
-16.5
-13.4
-10.3
-9.9
-25.4
-21.2
-30.3
-3.9
-11.0
-5.0
-21.6
Trade deficit (USD Bn)
-6.7
-11.4
-11.0
-10.4
-10.8
-12.8
-12.5
-10.5
-9.8
-9.8
-11.7
-7.6
-6.5
-5.1
Net FDI
3.2
2.7
3.3
3.8
1.7
1.7
2.2
2.8
4.9
2.7
3.6
4.1
2.8
1.5
FII (USD Bn)
3.8
2.0
3.1
-2.8
-2.0
-0.7
-3.5
-2.4
4.5
-3.8
-2.6
-1.5
-2.4
4.3
ECB (USD Bn)
2.3
2.7
7.3
2.4
3.2
2.1
0.8
2.6
2.1
3.2
3.0
1.4
1.4
1.5
(USD Bn)
NRI Deposits
61.8
62.5
63.4
63.8
63.7
64.1
66.5
65.6
65.3
66.7
66.2
67.8
68.4
66.2
Dollar-Rupee
338.1
341.4
344.6
352.5
355.2
353.3
355.4
350.0
353.6
351.6
352.1
349.2
346.8
355.6
FOREX Reserves (USD Bn)
295.8
291.9
293.4
296.4
287.9
284.6
280.2
275.5
276.3
283.0
291.3
295.7
292.2
294.4
(USD Bn)
Quarterly Economic Indicators Balance of Payment (USD Bn) Exports Imports Trade deficit Net Invisibles CAD CAD (% of GDP) Capital Account BoP
Q3FY14 79.8 112.9 -33.2 29.1 -4.1 0.9 23.8 19.1
Q4FY14 83.7 114.3 -30.7 29.3 -1.3 0.3 9.2 7.1
Q1FY15 81.7 116.3 -34.6 26.7 -7.9 1.6 19.2 11.2
Q2FY15 85.3 123.9 -38.6 28.5 -10.1 2.0 16.5 6.9
Q3FY15 79.0 118.3 -39.3 30.9 -8.4 1.7 23.6 13.2
Q4FY15 70.8 102.5 -31.7 30.2 -1.5 0.3 30.7 30.1
Q1FY16 68.0 102.2 -34.2 28.0 -6.1 1.2 18.1 11.4
Q2FY16 67.6 105.0 -37.4 29.2 -8.2 1.6 7.2 -0.9
Q3FY16 64.9 98.9 -34.0 26.9 -7.1 1.3 10.5 4.1
GDP and its Components (YoY, %) Agriculture & allied activities Industry Mining & Quarrying Manufacturing Electricity, Gas & Water Supply Services Construction Trade, Hotel, Transport and Communications Finance, Insurance, Real Estate & Business Services Community, Social & Personal Services GDP at FC
Q3FY14 3.8 5.5 4.2 5.9 3.9 8.3 3.8 12.4 5.7 9.1 6.6
Q4FY14 4.4 5.5 11.5 4.4 5.9 5.6 1.2 9.9 5.5 2.4 5.3
Q1FY15 2.6 8.1 4.3 8.4 10.1 8.4 6.5 12.1 9.3 2.8 7.4
Q2FY15 2.8 6.2 7.0 5.8 8.8 9.9 5.3 8.4 12.7 10.3 8.1
Q3FY15 -2.4 3.4 9.1 1.7 8.8 11.7 4.9 6.2 12.1 25.3 6.7
Q4FY15 -1.4 7.2 2.3 8.4 4.2 8.0 1.4 14.1 10.2 0.1 6.1
Q1FY16 1.6 7.1 8.6 7.3 4.0 8.5 6.0 10.5 9.3 6.1 7.2
Q2FY16 2.0 8.4 5.0 9.0 7.5 8.3 1.2 8.1 11.6 7.1 7.5
Q3FY16 -1.0 11.0 6.5 12.6 6.0 8.6 4.0 10.1 9.9 7.5 7.1
1 - 30 JUNE 2016
G RO U N D V I EW
35
Annual Economic Indicators and Forecasts Indicators
Units
FY8
FY9
FY10
FY11
FY12
FY13
FY14
FY15
FY16E
FY17E
Real GDP growth
%
9.3
6.7
8.6
8.9
6.7
4.5
4.7
7.2
6.8
7.5
Agriculture
%
5.8
0.1
0.8
8.6
5.0
1.4
4.7
0.2
2.0
4.0
Industry
%
9.2
4.1
10.2
8.3
6.7
0.9
-0.1
6.6
5.7
6.7
Services
%
10.3
9.4
10.0
9.2
7.1
6.2
6.0
9.4
8.5
8.8
38966
41587
45161
49185
52475
54821
91698
98271
104953
112825
Real GDP
Rs Bn
Real GDP
US$ Bn
Nominal GDP
Rs Bn
Nominal GDP Population
967
908
953
1079
1096
1008
1517
1611
1615
1684
49864
56301
64778
77841
90097
101133
113451
126538
137626
153212
US$ Bn
1237
1229
1367
1707
1881
1859
1876
2074
2117
2287
Mn
1138
1154
1170
1186
1202
1219
1236
1254
1271
1302
Per Capita Income
US$
1087
1065
1168
1439
1565
1525
1518
1655
1666
1757
WPI (Average)
%
4.7
8.1
3.8
9.6
8.7
7.4
6.0
2.0
-2.0
4.0
CPI (Average)
%
6.4
9.0
12.4
10.4
8.3
10.2
9.5
6.0
5.0
5.0
Money Supply
%
22.1
20.5
19.2
16.2
15.8
13.6
13.5
12.0
12.0
13.0
CRR
%
7.50
5.00
5.75
6.00
4.75
4.00
4.00
4.0
4.0
4.0
Repo rate
%
7.75
5.00
5.00
6.75
8.50
7.50
8.00
7.50
6.75
6.25-6.5
Reverse repo rate
%
6.00
3.50
3.50
5.75
7.50
6.50
7.00
6.50
5.75
5.25-5.5
Bank Deposit growth
%
22.4
19.9
17.2
15.9
13.5
14.4
14.6
11.4
12.0
13.5
Bank Credit growth
%
22.3
17.5
16.9
21.5
17.0
15.0
14.3
9.5
10.0
12.0
Centre Fiscal Deficit
Rs Bn
1437
3370
4140
3736
5160
5209
5245
5107
5351
5339
Centre Fiscal Deficit
% of GDP
2.9
6.0
6.4
4.8
5.7
5.2
4.6
4.1
3.9
3.5
Gross Central Govt Borrowings
Rs Bn
1681
2730
4510
4370
5098
5580
5641
5920
5850
6000
Net Central Govt Borrowings
Rs Bn
1318
2336
3984
3254
4362
4674
4536
4531
4406
4252
State Fiscal Deficit
% of GDP
1.5
2.4
2.9
2.1
1.9
2.0
2.5
2.4
2.0
1.5
Consolidated Fiscal Deficit
% of GDP
4.4
8.4
9.3
6.9
7.6
6.9
7.1
6.6
5.9
5.0
Exports
US$ Bn
166.2
189.0
182.4
251.1
309.8
306.6
318.6
316.7
270.0
283.5
YoY Growth
%
Imports
US$ Bn
YoY Growth
%
35.1
19.7
-2.5
26.7
31.1
0.5
-7.2
-1.1
-11.9
5.5
Trade Balance
US$ Bn
-91.5
-119.5
-118.2
-129.9
-189.8
-195.6
-147.6
-144.2
-136.0
-144.8
Net Invisibles
US$ Bn
75.7
91.6
80.0
84.6
111.604
107.5
115.2
116.2
118.8
121.1
Current Account Deficit
US$ Bn
-15.7
-27.9
-38.2
-45.3
-78.2
-88.2
-32.4
-27.9
-17.2
-23.7
CAD (% of GDP)
%
-1.3
-2.3
-2.8
-2.6
-4.2
-4.7
-1.7
-1.4
-0.8
-1.0
Capital Account Balance
US$ Bn
106.6
7.8
51.6
62.0
67.8
89.3
48.8
90.0
50.4
75.5
40.3
45.8
47.4
45.6
47.9
54.4
60.5
61.2
65.0
67.0
Dollar-Rupee (Average)
28.9
13.7
-3.5
37.6
23.4
-1.0
3.9
-0.6
-14.8
5.0
257.6
308.5
300.6
381.1
499.5
502.2
466.2
460.9
406.0
428.3
Source: RBI, CSO, CGA, Ministry of Agriculture, Ministry of commerce, Bloomberg, PhillipCapital India Research
3 6 GROUN D VI EW
1 - 30 JUNE 2016
1 - 30 JUNE 2016
G RO U N D V I EW
37
Sector
Agri Inputs
Agri Inputs
Agri Inputs
Agri Inputs
Agri Inputs
Agri Inputs
Agri Inputs
Agri Inputs
Agri Inputs
Agri Inputs
Automobiles
Automobiles
Automobiles
Automobiles
Automobiles
Automobiles
Automobiles
Automobiles
Automobiles
Capital Goods
Capital Goods
Capital Goods
Capital Goods
Capital Goods
Capital Goods
Capital Goods
Capital Goods
Name of company
Chambal Fertilisers
Zuari Agrochemicals
Rallis India
Tata Chemicals Ltd
Kaveri Seeds
United Phosphorus
Monsanto India
PI Industries
Coromandel Intl
Deepak Fertilisers
Tata Motors
Bharat Forge
Mahindra & Mahindra
Ashok Leyland
Apollo Tyres
Maruti Suzuki
Mahindra CIE
Bajaj Auto
Hero MotoCorp
Cummins India
Engineers India
Siemens
Crompton Greaves
VA Tech Wabag
Voltas
BHEL
Alstom T&D
353
126
326
592
64
1,173
186
865
2,951
2,549
186
3,854
159
104
1,334
774
387
167
228
636
2,407
599
405
411
210
197
64
Rs
CMP
90,333
307,419
107,819
32,275
39,861
417,604
62,653
239,792
589,278
737,611
60,143
1,164,277
80,731
296,398
828,786
180,276
1,258,671
14,752
66,392
87,158
41,553
256,884
27,950
104,590
40,770
8,298
26,760
Rs mn
Mkt Cap
41,950
258,137
55,468
28,942
127,703
103,609
15,978
48,074
283,477
224,979
60,664
557,984
118,404
175,338
383,840
75,839
2,582,235
33,995
98,386
22,849
4,943
128,903
9,247
181,331
16,417
51,046
106,626
FY16E
43,904
295,131
58,401
33,622
142,459
112,998
15,186
56,014
317,012
278,066
68,334
678,681
118,681
212,276
426,543
85,114
2,766,233
n.a.
105,672
27,361
5,764
141,881
11,136
190,743
18,660
54,930
105,340
FY17E
Net Sales (Rs mn)
3,793
-10,904
3,326
2,388
6,220
8,137
1,736
8,184
44,724
48,131
7,519
89,875
19,241
19,077
52,586
15,970
385,505
5,176
7,489
4,477
890
25,315
2,080
23,766
2,433
2,470
8,258
FY16E
4,236
15,208
4,615
2,883
8,709
10,259
2,195
10,074
49,335
59,019
9,345
107,652
18,752
23,825
59,716
17,919
456,242
n.a.
9,763
5,355
1,043
27,296
2,784
26,245
2,934
3,230
8,387
FY17E
EBIDTA (Rs mn)
1,821
-5,473
2,711
1,225
1,486
6,169
2,722
7,992
31,533
37,355
3,171
47,990
10,269
8,908
33,776
8,556
119,825
2,610
3,371
2,871
790
11,375
1,990
8,950
1,323
181
3,619
FY16E
2,096
12,262
3,690
1,483
3,578
8,582
2,803
9,102
34,996
43,542
4,607
67,041
9,107
12,375
39,069
10,428
158,535
n.a.
4,966
3,637
956
13,489
2,842
10,284
1,638
828
3,692
FY17E
PAT (Rs mn)
7
-2
8
23
2
17
8
29
158
129
10
159
20
3
57
37
37
30
12
21
46
27
29
35
7
4
9
8
5
11
27
6
24
8
33
175
150
14
222
18
4
66
45
49
n.a.
17
27
55
31
41
40
8
20
9
FY16E FY17E
EPS (Rs)
40.5
n.a.
-18.5
9.6
-19.3
73.7
-17.6
14.9
24.1
18.4
32.9
29.3
-3.1
280.9
9.4
19.2
-14.9
13.0
-16.8
16.7
-26.9
-3.3
-33.9
11.8
-15.9
-66.8
36.9
15.1
n.a.
36.1
21.0
140.8
39.1
3.0
13.9
11.0
16.6
45.3
39.7
-11.3
38.9
15.7
21.9
32.3
n.a.
47.3
26.7
21.0
18.6
42.8
14.9
23.8
358.3
2.0
49.6
-56.2
39.8
26.2
26.8
67.7
23.0
30.0
18.7
19.7
18.9
24.3
7.8
33.3
23.4
21.1
10.4
5.7
19.7
30.2
52.6
22.6
14.0
11.7
30.8
45.9
7.4
P/B (x)
EV/EBITDA (x)
43.1
25.1
29.2
21.7
11.1
48.6
22.3
26.3
16.8
16.9
13.0
17.4
8.8
24.0
20.2
17.3
7.9
-
13.4
23.9
43.5
19.0
9.8
10.2
24.9
10.0
7.2
6.2
0.9
4.7
3.2
1.0
8.8
2.3
7.5
7.3
5.7
2.7
4.2
1.3
5.1
3.5
4.4
1.8
0.8
2.4
7.6
10.9
4.0
3.1
1.7
4.5
1.0
1.1
5.8
0.9
4.2
2.9
0.9
8.1
2.3
6.8
6.1
4.8
2.3
3.5
1.2
4.3
3.2
3.7
1.5
-
2.1
6.0
11.0
3.6
2.5
1.5
4.1
1.0
1.0
24.0
-14.9
32.1
13.1
9.1
48.2
22.0
29.2
13.1
15.0
9.6
12.9
4.5
16.1
15.9
12.0
4.7
3.7
10.3
19.2
45.9
10.9
12.5
7.1
17.1
11.8
6.9
ROCE (%)
12.4
-1.6
11.8
12.3
3.7
13.0
10.1
25.1
38.9
29.1
14.3
17.3
18.6
15.3
15.2
21.0
17.4
15.2
12.0
25.3
20.6
18.5
22.1
14.6
14.7
2.2
14.4
13.4
3.5
14.3
13.4
8.4
16.6
10.1
25.7
36.1
28.2
17.7
20.0
14.1
17.9
15.6
21.4
18.7
-
16.1
25.3
25.3
19.8
25.7
15.1
16.4
9.5
13.3
12.4
-1.2
12.0
9.8
3.2
10.6
10.2
21.6
38.7
26.6
10.5
17.4
15.8
12.7
12.9
15.4
8.2
11.6
13.7
26.1
17.9
16.0
23.4
8.4
13.3
0.6
6.9
13.1
2.8
14.9
10.6
6.5
13.6
10.3
22.7
36.0
26.5
14.5
20.6
12.3
15.5
13.8
17.3
9.4
-
17.2
26.0
19.8
16.1
27.5
9.2
15.1
2.7
6.9
FY16E FY17E FY16E FY17E
ROE (%)
Note: For banks, EBITDA is pre-provision profit
21.1
12.6
22.6
11.0
6.2
37.3
17.9
23.7
11.8
12.0
7.2
10.5
4.9
12.7
13.8
10.4
4.1
-
7.5
15.6
39.1
10.1
8.9
6.2
14.0
8.5
6.5
FY17E FY16E FY17E FY16E FY17E
P/E (x)
FY16E FY17E FY16E
EPS Growth (%)
PhillipCapital India Coverage Universe: Valuation Summary
3 8 GROUN D VI EW
1 - 30 JUNE 2016
Sector
Capital Goods
Capital Goods
Capital Goods
Capital Goods
Capital Goods
Capital Goods
Cement
Cement
Cement
Cement
Cement
Cement
Cement
Cement
Cement
Cement
Cement
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Name of company
ABB India
Larsen & Toubro
KEC International
Thermax
Inox Wind
Alstom India
Dalmia Bharat Ltd
Shree Cement
Mangalam Cement
OCL India
JK Lakshmi Cement
JK Cement
HeidelbergCement
India Cement
Ambuja Cement
ACC
Ultratech Cement
LIC Housing Finance
DCB Bank
Indusind Bank
Repco Home Finance
Punjab National Bank
Bank of India
Corporation bank
Bank of Baroda
State Bank of India
Union Bank
118
189
158
38
87
79
648
1,066
92
469
3,228
1,462
221
92
99
590
344
507
264
13469
880
618
237
768
131
1,316
1,284
Rs
CMP
81,152
1,463,284
363,251
38,343
71,040
155,811
40,552
634,375
26,122
236,788
885,764
274,559
342,969
28,322
22,412
41,226
40,520
28,820
7,055
469,221
78,178
41,536
52,539
91,524
33,563
1,226,388
272,165
Rs mn
Mkt Cap
82,194
761,480
123,908
43,730
113,051
172,775
2,508
45,347
6,208
124,490
269,193
114,328
217,573
58,814
18,151
34,229
25,754
25,121
8,461
60,803
65,288
23,144
42,332
54,828
87,242
1,017,884
81,403
FY16E
90,635
865,203
144,969
49,080
127,049
195,620
10,987
54,526
7,681
147,147
323,990
126,246
257,518
65,319
20,061
40,965
32,671
29,245
9,655
88,591
80,830
27,900
49,830
51,416
93,074
1,127,411
92,625
FY17E
Net Sales (Rs mn)
58,333
504,778
85,903
32,989
63,902
127,147
2,508
42,493
3,553
25,186
48,321
11,730
28,955
8,224
2,156
4,596
4,009
4,144
513
14,340
13,495
1,174
6,764
4,676
6,769
119,264
7,125
FY16E
63,774
504,629
103,271
36,350
74,176
140,053
3,196
50,352
3,210
29,807
65,056
15,917
41,401
9,926
2,962
6,598
5,450
5,573
1,075
25,234
20,020
1,741
8,519
4,543
7,531
138,973
8,633
FY17E
EBIDTA (Rs mn)
12,762
126,779
-15,488
-1,921
-31,887
31,259
1,492
22,783
1,623
16,280
22,321
7,520
13,506
966
362
638
705
1,878
-187
5,323
1,308
918
4,531
2,825
1,807
44,079
2,999
FY16E
11,365
145,077
35,224
2,648
11,076
43,195
1,901
26,948
1,298
19,248
33,557
9,415
18,531
2,430
989
1,910
1,904
3,025
220
11,146
5,202
1,470
5,715
2,720
2,290
54,793
3,885
FY17E
PAT (Rs mn)
34
24
10
22
-21
16
24
39
6
32
81
40
7
3
2
9
6
33
-7
204
15
14
20
24
7
47
14
-33.8
71.0
21.0
59.4
-0.2
15.8
43
28
17
26
17
21
30
46
5
38
122
50
9
8
4
27
16
53
8
320
19.7
4.2
-33.2
28.4
-182.5
-3.9
20.7
14.1
-15.1
17.4
6.4
-35.3
-29.3
n.a.
n.a.
-48.9
-57.9
38.2
n.a.
66.5
26.8
15.1
65.5
15.1
-178.1
31.7
-
18.3
-20.0
18.2
50.3
25.2
37.2
151.7
173.3
199.5
170.2
61.0
n.a.
57.1
297.7
60.1
26.1
-3.7
26.7
24.3
29.6
3.5
7.9
15.4
1.7
-4.1
5.0
27.2
27.6
15.9
14.6
39.7
36.5
32.5
29.3
61.9
64.6
57.5
15.3
-37.7
66.1
59.7
45.2
11.6
32.4
18.6
27.9
90.8
P/B (x)
EV/EBITDA (x)
2.8
6.8
9.3
1.5
5.3
3.8
21.4
23.3
19.9
12.3
26.4
29.2
23.7
11.7
22.7
21.6
21.3
9.5
32.1
42.1
15.0
28.3
9.2
33.7
14.7
22.5
70.1
0.5
1.0
1.1
0.1
0.6
0.5
4.3
3.7
1.7
2.6
4.2
3.3
2.3
0.8
2.5
2.5
2.9
2.1
1.4
8.2
1.7
3.6
3.0
3.9
2.3
2.8
9.0
0.5
0.9
0.9
0.1
0.5
0.5
0.1
3.3
1.5
2.2
3.7
3.1
2.3
0.7
2.2
2.3
2.6
1.8
1.3
7.0
1.7
2.4
3.7
2.0
2.6
8.5
1.4
2.9
4.2
1.2
1.1
1.2
16.2
14.9
7.4
9.4
20.0
22.3
11.2
6.9
14.5
14.9
14.9
7.0
24.5
32.0
10.6
25.5
8.9
19.9
8.1
18.5
38.2
1.3
2.9
3.5
1.1
1.0
1.1
16.1
12.6
8.1
7.9
14.3
16.7
7.7
5.2
9.8
10.2
10.4
4.7
11.1
17.7
7.1
16.3
7.0
19.6
7.1
15.7
31.5
FY17E FY16E FY17E FY16E FY17E
P/E (x)
FY16E FY17E FY16E
EPS Growth (%)
59 1,205.6
22
26
23
9
59
18
FY16E FY17E
EPS (Rs)
PhillipCapital India Coverage Universe: Valuation Summary ROCE (%)
6.6
7.3
-4.0
-1.8
-11.5
7.9
17.0
16.6
10.0
19.2
10.6
8.9
7.2
2.7
4.0
3.8
5.0
13.5
-3.7
12.4
2.9
8.0
26.1
12.2
12.2
10.0
10.0
5.4
7.6
8.8
2.3
3.8
9.8
18.4
14.6
7.4
19.4
14.1
10.8
9.5
6.0
9.8
10.6
12.4
18.7
4.2
16.7
11.6
26.3
11.0
13.8
11.4
12.1
0.3
0.4
-0.2
-0.1
-0.5
0.5
2.2
1.9
0.9
1.3
8.2
8.1
10.4
4.6
4.2
4.6
5.5
11.1
0.9
11.8
5.0
8.5
18.0
9.6
9.5
4.4
9.5
0.3
0.7
0.5
0.1
0.2
0.6
2.2
1.8
0.6
1.3
11.0
9.7
10.7
6.4
6.8
6.9
8.4
16.5
4.6
17.1
7.7
25.8
18.3
8.6
10.3
4.9
11.0
FY16E FY17E FY16E FY17E
ROE (%)
1 - 30 JUNE 2016
G RO U N D V I EW
39
Sector
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
Financials
FMCG
FMCG
FMCG
FMCG
FMCG
FMCG
FMCG
FMCG
FMCG
FMCG
FMCG
FMCG
FMCG
Name of company
Canara Bank
Indian Bank
Oriental Bank of Com
ICICI Bank
Shriram Transport Fin
Shriram City Union Fin
AXIS Bank
CIFC
HDFC Limited
Mah & Mah Fina
HDFC Bank
SKS Microfinance
Andhra Bank
Indian Overseas Bank
Asian Paints
Hindustan Unilever
Bajaj Corp
ITC
Emami
Nestle
Jubilant Foodworks
Marico Industries
Colgate
Agro Tech Foods
Dabur India Ltd
Godrej Consumer Prod
Britannia
2,936
1,439
291
483
837
254
1,178
5,710
1,075
318
393
853
929
30
51
598
1,149
299
1,196
894
493
1,644
1,120
232
84
86
188
Rs
CMP
352,303
490,113
512,614
11,765
227,638
328,091
77,507
550,563
243,877
2,560,621
57,923
1,845,838
890,903
53,495
34,944
76,122
2,906,343
169,919
1,889,252
139,563
1,174,597
108,358
254,029
1,348,040
27,094
41,401
102,272
Rs mn
Mkt Cap
86,929
89,573
84,360
7,802
40,943
61,223
24,320
81,236
26,597
360,747
8,742
317,059
151,051
73,446
52,389
12,614
274,149
31,755
311,386
20,710
163,255
23,845
50,117
211,212
53,538
44,674
91,757
FY16E
99,728
99,180
96,112
8,415
45,004
66,307
28,923
99,957
32,691
404,207
9,500
350,577
172,681
n.a.
59,881
19,290
324,937
35,666
353,656
24,084
192,698
27,169
58,103
243,027
59,126
48,420
99,117
FY17E
Net Sales (Rs mn)
11,999
16,242
15,199
543
9,477
10,655
2,730
16,018
7,171
143,653
2,716
63,333
27,732
48,072
36,449
4,149
223,351
20,160
100,235
12,220
159,084
13,950
36,904
250,632
38,913
31,614
69,458
FY16E
14,270
18,119
17,399
638
10,594
12,687
3,564
21,369
9,652
165,720
2,959
71,861
32,997
n.a.
41,930
6,085
263,567
22,752
114,400
14,700
181,827
15,987
43,284
256,001
41,596
33,215
71,508
FY17E
EBIDTA (Rs mn)
8,528
11,312
12,528
235
6,225
7,250
1,081
10,410
5,737
96,700
2,434
41,131
17,910
11,896
4,814
2,964
124,109
5,509
69,114
5,304
85,465
6,154
13,587
120,868
547
7,386
10,027
FY16E
10,209
12,856
14,317
337
6,681
8,661
1,502
12,236
7,602
111,857
2,577
46,775
21,074
n.a.
9,668
4,301
147,056
7,602
79,030
7,224
99,622
6,884
14,911
130,580
4,262
9,103
14,946
FY17E
PAT (Rs mn)
71
33
7
10
23
6
17
108
25
12
17
19
19
8
14
24
50
10
32
34
34
93
60
21
31
22
48
85
38
8
14
25
7
23
127
33
14
17
22
22
-
18
34
59
13
38
46
37
104
66
22
43
28
65
FY16E FY17E
EPS (Rs)
57.2
24.4
17.5
-36.9
11.4
30.1
-12.3
-12.2
18.2
5.3
10.9
6.7
25.9
72.2
32.4
58.5
21.5
-33.8
17.4
12.5
10.6
10.3
9.8
7.9
86.7
5.3
-15.4
19.7
13.7
14.3
43.4
7.3
19.5
38.9
17.5
32.5
15.7
5.8
13.7
17.7
-
26.6
45.1
18.5
38.0
-
36.2
7.5
11.9
9.7
7.8
38.7
28.6
35.3
41.3
43.3
40.9
50.0
36.6
45.3
71.3
52.9
42.5
26.3
23.8
45.0
49.7
3.5
3.7
25.4
23.2
30.6
37.1
26.2
14.3
17.6
18.7
11.1
2.7
3.9
3.9
P/B (x)
EV/EBITDA (x)
34.5
38.1
35.8
34.9
34.1
37.9
51.3
45.0
32.1
22.7
22.5
39.5
42.3
-
2.9
17.5
19.6
22.2
31.4
19.2
13.3
15.7
17.0
10.3
2.0
3.0
2.9
19.5
9.4
12.3
3.5
27.0
15.2
9.9
22.6
16.6
7.3
12.1
52.3
15.9
0.4
0.4
5.6
4.1
2.8
5.4
3.8
2.5
2.4
112.0
1.7
0.3
0.4
0.5
14.3
7.9
10.4
3.3
24.6
12.7
8.3
21.6
13.7
6.3
12.1
54.4
13.4
-
0.4
4.3
3.5
2.6
4.7
3.2
2.2
2.2
112.0
1.6
0.2
0.4
0.4
29.4
31.3
33.6
21.4
23.7
30.6
28.5
33.9
34.7
17.1
20.8
28.7
32.0
1.1
1.0
18.3
13.0
8.4
18.8
11.4
7.4
7.8
6.9
5.4
0.7
1.3
1.5
24.1
27.7
28.9
17.8
21.1
25.5
21.8
25.3
25.2
14.6
19.0
25.3
26.6
-
0.8
12.5
11.0
7.5
16.5
9.5
6.5
6.8
5.9
5.3
0.7
1.2
1.4
FY17E FY16E FY17E FY16E FY17E
P/E (x)
FY16E FY17E FY16E
EPS Growth (%)
PhillipCapital India Coverage Universe: Valuation Summary ROCE (%)
47.1
21.8
30.2
7.1
73.9
33.6
13.9
42.8
39.1
27.8
50.7
116.4
31.9
7.1
4.9
24.9
18.6
9.5
21.0
15.6
17.7
14.3
13.9
14.3
0.4
5.7
3.7
41.3
20.8
29.0
9.4
72.3
33.5
16.2
48.0
42.8
27.8
53.7
137.6
31.6
-
8.9
27.7
19.1
12.3
21.1
18.2
17.8
14.4
13.5
14.0
3.0
6.7
5.1
50.0
16.5
28.0
7.5
77.2
31.1
14.3
39.5
22.6
23.6
40.6
113.6
32.6
0.3
0.2
4.8
1.9
1.5
2.6
2.1
1.7
3.2
2.1
1.8
0.0
0.4
0.2
44.5
16.9
27.2
9.4
75.6
32.6
17.0
49.1
20.8
24.5
49.9
135.2
31.9
-
0.4
4.2
1.9
1.9
2.6
2.4
1.7
3.2
2.0
1.7
0.2
0.4
0.2
FY16E FY17E FY16E FY17E
ROE (%)
4 0 GROUN D VI EW
1 - 30 JUNE 2016
Sector
FMCG
FMCG
Infrastructure
Infrastructure
Infrastructure
Infrastructure
Infrastructure
Infrastructure
Infrastructure
Infrastructure
Infrastructure
Infrastructure
Infrastructure
IT Services
IT Services
IT Services
IT Services
IT Services
IT Services
IT Services
IT Services
IT Services
Media
Media
Media
Media
Media
Name of company
Apcotex Industries
Glaxo Smithkline Cons
J Kumar Infraprojects
PNC Infratech Ltd
GMR Infrastructure
GVK Power
MBL Infrastructures Ltd
KNR Construction
NCC
ITD Cementation
Ashoka Buildcon
Adani Ports & SEZ
IRB Infrastructure
Mindtree Ltd
Wipro
NIIT Technologies
Infosys Technologies
Tata Consultancy
HCL Technologies
Persistent Systems
KPIT Technologies
Tech Mahindra
Zee Entertainment
DB Corp Limited
Jagran Prakashan
HT Media
Dish TV
96
89
172
330
448
481
165
737
715
2,566
1,210
474
542
660
220
195
139
133
78
518
131
6
12
534
249
6,083
288
Rs
CMP
102,639
20,738
56,327
60,562
429,801
466,907
32,518
58,932
1,008,127
5,056,512
2,788,378
29,012
1,339,868
110,809
77,214
404,146
26,042
20,566
43,168
14,569
5,431
10,107
72,431
27,421
18,829
255,820
5,982
Rs mn
Mkt Cap
30,925
24,898
20,941
20,600
59,367
263,360
32,243
23,123
455,250
1,086,462
624,420
26,810
512,440
46,896
49,104
69,353
26,758
36,304
79,658
10,076
21,433
29,885
108,828
19,512
14,775
42,891
2,765
FY16E
35,240
27,363
23,558
23,356
69,706
285,973
33,766
28,705
498,115
1,188,528
704,536
29,197
560,902
55,710
55,492
71,132
33,201
41,750
83,644
12,594
24,648
48,605
94,388
23,415
18,469
46,973
5,382
FY17E
Net Sales (Rs mn)
9,889
3,077
5,991
5,477
15,545
41,873
4,353
4,171
99,567
306,780
170,790
4,749
111,986
8,299
26,355
46,211
7,950
3,086
7,129
1,511
2,358
18,897
46,076
2,576
2,719
7,104
406
FY16E
11,321
4,074
6,960
6,970
20,346
46,561
4,556
4,608
108,506
328,365
198,583
5,010
117,579
10,163
31,495
49,181
10,989
3,966
7,737
1,889
2,711
28,264
33,267
3,091
3,371
7,953
531
FY17E
EBIDTA (Rs mn)
2,414
1,692
3,242
3,053
9,985
28,668
2,815
2,974
80,661
242,148
134,920
2,788
88,943
6,033
5,904
26,677
963
1,016
2,177
1,160
705
-6,809
-16,983
1,264
1,154
7,023
226
FY16E
3,904
2,431
4,109
4,267
13,143
30,070
2,883
3,274
88,317
264,792
155,443
3,010
91,514
7,272
6,378
29,109
1,393
1,532
3,003
1,124
783
-3,136
-28,985
1,640
1,614
7,970
299
FY17E
PAT (Rs mn)
2
7
10
17
10
30
15
37
57
123
59
46
36
36
17
13
5
7
4
41
17
-4
-3
25
15
167
11
4
10
13
23
14
31
15
41
63
135
68
50
37
43
18
14
7
10
5
40
19
-2
-5
32
21
190
14
FY16E FY17E
EPS (Rs)
-
-5.9
41.1
-3.5
2.1
7.3
16.8
2.3
47.9
22.9
9.4
144.6
3.0
12.3
2.8
15.1
0.3
957.1
94.8
58.9
-56.0
33.8
-46.1
-2.3
4.2
20.4
-8.3
61.8
43.7
26.7
39.7
31.6
4.9
2.4
10.1
9.5
9.4
15.2
8.0
2.9
20.5
8.0
9.1
44.5
50.8
37.9
-3.1
11.1
-53.9
70.7
29.8
39.8
13.5
32.3
42.5
12.3
16.9
19.8
43.0
16.2
11.2
19.8
12.5
20.8
20.5
10.3
15.0
18.3
13.1
15.1
27.0
20.2
19.8
12.6
7.7
-1.5
-3.9
21.7
16.3
36.4
26.6
P/B (x)
EV/EBITDA (x)
26.3
8.5
13.3
14.2
32.7
15.4
10.9
18.0
11.4
19.0
17.8
9.5
14.6
15.2
12.1
13.9
18.7
13.4
14.4
13.0
6.9
-3.2
-2.3
16.7
11.7
32.1
20.1
-142.5
1.0
3.3
4.2
7.9
3.0
2.3
3.6
3.1
6.9
4.5
1.8
2.9
4.6
1.5
3.1
1.3
3.5
1.3
2.1
0.8
0.7
1.0
2.2
1.5
10.3
5.5
32.2
0.8
2.8
3.7
7.1
2.6
1.9
3.1
2.7
5.8
4.0
1.6
2.5
3.8
1.2
2.6
1.3
2.8
1.2
1.8
0.7
0.7
1.7
1.9
1.3
8.9
4.9
11.3
7.8
9.6
10.9
26.7
10.5
7.1
13.8
10.1
16.3
14.3
5.9
12.4
13.1
8.1
12.4
8.5
9.3
8.6
9.8
5.4
12.7
11.1
11.0
6.7
33.2
14.5
9.6
5.2
7.8
8.3
20.2
9.0
6.7
12.4
9.2
15.1
11.8
5.1
11.5
10.3
7.4
11.4
6.1
7.4
7.5
7.9
5.4
8.4
14.7
9.5
6.0
28.9
11.0
FY17E FY16E FY17E FY16E FY17E
P/E (x)
FY16E FY17E FY16E
EPS Growth (%)
PhillipCapital India Coverage Universe: Valuation Summary ROCE (%)
-335.1
7.8
19.8
21.3
18.4
18.3
20.4
18.1
25.1
33.1
21.8
17.7
19.1
25.2
11.2
20.4
5.0
17.2
6.4
18.5
10.4
-45.7
-24.9
12.7
11.1
28.2
20.5
122.6
9.9
21.2
26.1
21.7
16.8
17.5
17.4
23.9
30.4
22.4
16.7
17.4
25.0
10.1
18.5
6.7
20.6
8.1
15.3
10.5
-21.7
-73.7
12.2
11.8
27.8
24.3
671.4
9.0
16.3
18.8
20.8
19.0
17.4
17.6
25.3
35.8
23.0
17.9
19.0
26.5
3.2
10.7
4.5
14.1
10.0
17.4
9.9
1.2
2.2
11.6
10.8
30.3
20.1
87.1
11.0
16.1
23.5
23.5
17.4
17.3
17.3
24.6
32.1
23.6
16.3
17.2
26.3
3.5
11.0
6.1
15.8
10.4
14.6
9.9
3.4
-0.6
11.3
11.4
29.6
23.9
FY16E FY17E FY16E FY17E
ROE (%)
1 - 30 JUNE 2016
G RO U N D V I EW
41
Metals
Metals
Metals
ELECTRICALS
ELECTRICALS
ELECTRICALS
ELECTRICALS
ELECTRICALS
Logistics
Logistics
Hindustan Zinc
Jindal Steel & Power
Hindalco Inds
Havells India Ltd
Finolex Cables Ltd
VGuard Industries Ltd
KEI Industries
Bajaj Electricals Ltd
Allcargo Logistics
VRL Logistics Ltd
Container Corp Of India Logistics
Midcap
Midcap
Midcap
Oil & Gas
Oil & Gas
Oil & Gas
Praj Inds.
The Byke Hospitality
PEBS
Indraprastha Gas
Petronet LNG
Gujarat State Petronet
Midcap
Metals
JSW Steel
Pennar Inds.
Metals
Vedanta Ltd
Midcap
Metals
Tata Steel
KDDL
Metals
SAIL
Midcap
1,339
Metals
NALCO
Sintex Industries
398
Media
Eros International
140
284
569
149
156
96
47
166
82
148
232
110
1,197
292
342
93
64
168
1,283
103
331
43
43
208
270
Media
HMVL
Rs
Sector
Name of company
CMP
79,121
212,738
79,632
5,122
6,253
17,133
5,693
1,672
36,483
260,973
36,338
37,260
23,410
8,500
36,023
44,658
213,765
192,870
58,554
709,854
310,057
305,067
321,084
175,529
111,079
19,473
19,820
Rs mn
Mkt Cap
10,252
281,150
37,007
79,036
2,137
10,833
15,098
4,658
79,036
57,711
17,215
55,366
47,064
24,036
19,436
24,029
52,986
1,004,752
205,664
139,590
428,642
639,312
1,236,774
372,349
65,764
18,247
9,119
FY16E
12,500
272,419
32,238
101,178
2,761
13,920
19,470
5,564
101,178
67,724
19,077
64,113
52,624
27,954
23,087
28,031
62,975
1,055,956
230,731
153,391
544,923
711,343
1,185,401
439,027
71,103
20,035
10,193
FY17E
Net Sales (Rs mn)
8,866
17,250
7,797
13,531
449
1,128
1,593
394
13,531
12,015
2,851
4,983
2,641
2,389
1,535
3,112
7,110
86,301
41,477
66,406
62,073
147,088
64,736
-22,098
8,987
4,447
2,179
FY16E
11,003
20,993
7,971
17,824
580
1,803
2,235
502
17,824
14,912
3,248
6,225
3,166
2,880
1,921
3,802
8,470
106,340
51,159
81,500
116,228
197,007
155,438
19,294
10,506
5,265
2,605
FY17E
EBIDTA (Rs mn)
4,525
10,777
4,241
6,156
241
696
517
89
6,156
8,856
1,166
2,534
906
1,146
902
2,168
3,547
-4,399
-18,148
81,967
930
21,562
3,150
-31,364
6,715
3,190
1,747
FY16E
6,087
10,919
4,463
8,252
329
1,150
835
132
8,252
10,859
1,454
3,189
1,242
1,770
1,142
2,564
6,023
8,081
-10,757
73,084
34,716
47,764
36,915
-13,846
8,444
3,694
2,080
FY17E
PAT (Rs mn)
8
14
31
14
6
4
4
9
14
45
13
10
9
15
30
14
6
-2
-20
19
4
7
3
-8
3
34
24
11
15
32
19
8
6
7
13
19
56
16
13
12
23
38
17
10
4
-12
17
144
16
38
-3
3
40
28
FY16E FY17E
EPS (Rs)
-55.9
25.7
15.8
19.1
10.3
22.1
-0.3
11.8
20.3
52.5
44.0
31.3
11.8
-15.5
33.1
28.1
-749.0
66.4
27.5
23.1
-23.7
-115.7
-386.5
0.2
-95.0
-66.7
34.5
1.3
2.3
34.1
36.7
65.1
61.6
47.3
34.1
22.6
24.8
25.9
37.1
54.4
26.6
18.3
69.8
-283.7
-40.7
-10.8
3,632.7
121.5
17.5
19.7
18.3
10.8
25.9
24.5
11.0
18.7
5.9
29.5
31.2
14.7
25.8
7.4
39.8
20.6
60.2
-43.8
-3.2
13.0
19.5
17.8
8.1
19.0
14.9
6.8
12.7
4.4
24.0
25.0
11.7
18.8
4.8
31.4
17.4
35.5
23.9
-5.4
9.7
8.9
333.4 8.7
6.4
8.7
-12.7
13.2
5.2
9.5
14.1
101.9
-5.6
16.5
6.1
11.3
P/B (x)
EV/EBITDA (x)
2.0
3.3
3.3
#N/A
2.6
1.2
-
-
3.1
-
1.8
-
-
-
-
8.1
0.5
0.3
1.9
1.5
0.7
1.1
0.4
0.9
1.1
2.2
1.8
3.0
2.9
#N/A
2.4
1.1
-
-
2.8
-
1.6
-
-
-
-
7.4
0.5
0.3
1.7
1.3
0.6
1.0
0.5
0.8
0.9
1.8
9.4
13.3
10.2
4.3
13.9
14.1
4.1
7.0
6.6
19.7
13.6
8.1
11.8
5.5
23.6
13.7
28.1
9.2
11.2
5.4
11.6
7.1
16.6
-22.2
7.5
5.1
8.7
7.2
10.9
9.6
3.3
10.6
8.5
3.0
5.9
5.1
15.8
11.8
6.5
9.7
4.6
18.6
10.7
23.2
7.2
8.8
5.4
5.9
5.2
6.5
26.6
6.3
4.2
6.6
FY17E FY16E FY17E FY16E FY17E
P/E (x)
FY17E FY16E
- 1,071.8
-243.8
-42.8
29.1
24.2
FY16E
EPS Growth (%)
PhillipCapital India Coverage Universe: Valuation Summary ROCE (%)
11.4
16.9
18.0
11.7
20.6
10.8
11.0
10.5
11.7
10.5
21.7
12.1
11.9
32.5
20.0
15.0
13.4
-1.2
-8.6
21.9
0.5
4.8
1.0
-7.8
5.2
17.8
19.3
13.6
15.2
16.2
13.7
23.0
16.5
15.6
14.0
13.7
11.8
23.8
13.6
14.3
41.3
20.9
15.6
21.0
2.1
-5.4
17.3
14.9
10.1
11.3
-3.6
6.4
17.3
18.9
9.2
10.0
14.9
7.3
19.3
8.9
15.7
8.0
7.3
10.4
15.1
10.4
10.0
24.5
18.9
15.2
12.3
2.3
3.2
18.7
-0.1
-1.5
1.9
-2.3
5.0
13.9
22.0
11.2
10.2
14.1
8.7
22.5
13.9
19.1
8.8
8.7
11.7
17.6
12.0
11.4
29.3
20.7
15.7
19.1
3.4
1.3
17.1
8.1
7.0
5.0
0.1
5.7
14.0
21.4
FY16E FY17E FY16E FY17E
ROE (%)
4 2 GROUN D VI EW
1 - 30 JUNE 2016
Sector
Oil & Gas
Pharma
Pharma
Pharma
Pharma
Pharma
Pharma
Pharma
Pharma
Pharma
Pharma
Retail
Telecom
Telecom
Telecom
Telecom
Telecom
Utilities
Utilities
Utilities
Utilities
Specialty Che
Specialty Che
Specialty Che
Specialty Che
Specialty Che
Specialty Che
Name of company
Gujarat Gas Ltd
Cadila Healthcare
Sun Pharma
Dr Reddy's Labs.
Aurobindo Pharma
Cipla Ltd
Ipca Laboratories
Divi's Laboratories
Glenmark Pharma
Lupin
Biocon
Titan Company
Bharti Airtel
Idea Cellular
Tata Communications
Bharti Infratel
Reliance Com
Coal India
PTC India
Power Grid Corp
NTPC
Atul Ltd
Camlin Fine Sciences
Meghmani Organics
Vinati Organics
Aarti Industries
SRF Ltd
1,387
522
476
38
100
2,026
141
144
65
284
55
372
435
112
362
374
627
1,616
859
1,064
468
536
801
2,971
804
333
523
Rs
CMP
79,654
43,460
24,578
9,728
9,647
60,101
1,166,321
752,826
19,196
1,792,900
136,023
705,750
124,046
403,078
1,447,459
332,032
125,300
728,529
242,275
282,472
59,086
430,855
468,896
506,749
1,933,899
341,316
72,068
Rs mn
Mkt Cap
46,189
27,182
6,047
12,605
5,044
25,863
725,044
207,959
137,014
773,545
234,448
78,669
210,530
357,974
982,624
118,178
33,578
130,195
73,190
35,701
28,663
14,118
140,096
157,409
283,181
95,789
59,933
FY16E
53,160
32,000
7,189
14,363
6,928
27,678
798,674
253,694
181,612
880,021
n.a.
85,457
223,195
390,485
1,065,703
134,942
38,674
163,081
86,822
41,757
37,896
17,896
158,073
167,520
337,829
103,242
55,787
FY17E
Net Sales (Rs mn)
9,884
5,328
1,701
2,710
872
4,552
177,772
183,327
10,802
163,466
82,810
53,624
33,285
129,395
326,641
10,991
7,894
33,541
16,473
13,584
4,152
2,958
32,418
41,556
85,153
22,747
7,301
FY16E
11,855
6,336
2,049
2,944
1,275
5,010
198,808
225,368
13,079
198,241
n.a.
59,588
36,087
137,572
354,885
12,415
9,609
46,025
20,148
16,076
8,079
3,454
38,570
44,728
120,653
24,139
9,779
FY17E
EBIDTA (Rs mn)
4,320
2,584
994
733
366
2,715
85,711
62,888
3,126
145,174
14,143
22,199
1,714
34,969
51,089
7,834
4,537
21,128
8,555
10,086
1,731
1,835
20,305
25,296
52,444
14,723
1,686
FY16E
5,183
3,169
1,209
850
584
2,969
97,729
75,359
3,371
166,590
n.a.
26,226
2,674
17,126
64,256
9,090
5,536
29,307
11,638
11,935
4,786
2,040
24,219
28,738
80,656
16,509
3,966
FY17E
PAT (Rs mn)
75
31
19
3
4
91
10
12
11
23
7
12
6
10
13
9
23
47
30
38
14
23
35
148
22
14
12
90
38
23
3
6
100
12
14
11
26
n.a.
14
9
5
16
10
28
65
41
45
38
25
42
169
34
16
29
FY16E FY17E
EPS (Rs)
40.6
29.1
-14.2
62.9
-7.0
14.2
2.0
25.1
-12.1
5.8
47.7
11.5
60.9
9.5
-14.6
-4.0
10.1
-12.1
10.3
17.0
-35.3
44.2
23.6
10.9
9.8
24.8
-62.1
20.0
22.6
21.6
16.1
59.7
9.3
14.0
19.8
7.8
14.8
n.a.
18.1
56.0
-51.0
25.8
16.0
22.0
38.7
36.0
18.3
176.5
11.2
19.3
13.6
53.8
12.1
135.2
18.5
16.8
24.7
13.3
26.2
22.1
13.6
12.0
6.1
12.3
8.0
31.7
72.4
11.5
28.4
42.4
27.6
34.4
28.3
28.0
33.9
23.5
23.0
20.0
36.9
23.2
42.7
P/B (x)
EV/EBITDA (x)
15.4
13.7
20.3
11.4
16.4
20.3
11.9
10.0
5.7
10.8
-
26.8
46.4
23.5
22.5
36.5
22.6
24.8
20.8
23.7
12.3
21.1
19.3
17.6
24.0
20.7
18.2
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
1.3
1.8
0.6
3.9
0.4
4.3
20.5
1.5
2.0
9.2
3.2
6.9
5.1
6.8
2.5
3.4
6.5
3.8
6.5
6.2
3.5
#N/A
#N/A
#N/A
#N/A
#N/A
#N/A
1.2
1.5
0.5
3.4
-
4.5
18.0
1.4
1.7
7.9
2.8
5.5
4.2
5.6
2.1
2.9
4.9
3.2
5.2
5.0
3.0
10.3
9.9
14.5
5.7
12.3
13.4
10.9
9.8
7.5
7.6
5.3
13.2
5.8
6.8
8.1
29.4
15.0
21.4
15.6
20.8
15.7
146.0
15.8
12.6
22.0
15.6
12.8
ROCE (%)
16.0
20.6
19.4
12.2
22.0
21.2
9.8
15.5
9.5
31.4
4.8
13.7
28.3
13.2
7.0
23.5
11.4
19.9
18.1
24.1
7.3
15.0
28.3
18.8
17.7
26.9
8.1
18.2
20.9
19.8
13.0
27.7
19.2
10.4
16.5
9.6
31.4
-
16.8
38.8
6.1
7.4
23.4
12.6
22.3
20.0
23.6
17.2
14.5
25.7
18.1
21.8
24.0
16.6
-
-
10.1
-
6.1
6.2
9.8
33.2
4.2
10.4
4.9
7.0
5.1
24.0
11.0
19.9
12.8
-
5.5
-
25.4
13.1
14.5
19.4
5.6
-
-
11.0
-
6.2
6.7
7.7
33.2
-
11.9
5.6
4.5
5.0
23.9
-
-
14.7
-
13.0
-
26.7
13.0
18.6
19.5
9.3
FY16E FY17E FY16E FY17E
ROE (%)
Note: For banks, EBITDA is pre-provision profit
8.4
8.3
12.1
5.1
9.3
11.8
10.6
8.5
7.1
5.8
-
11.8
5.1
6.2
7.1
25.7
12.2
15.3
12.5
17.5
8.1
125.2
13.0
11.4
15.1
14.5
9.6
FY17E FY16E FY17E FY16E FY17E
P/E (x)
FY16E FY17E FY16E
EPS Growth (%)
PhillipCapital India Coverage Universe: Valuation Summary
Disclosures and Disclaimers PhillipCapital (India) Pvt. Ltd. has three independent equity research groups: Institutional Equities, Institutional Equity Derivatives and Private Client Group. This report has been prepared by Institutional Equities Group. The views and opinions expressed in this document may or may not match or may be contrary at times with the views, estimates, rating, target price of the other equity research groups of PhillipCapital (India) Pvt. Ltd. This report is issued by PhillipCapital (India) Pvt. Ltd. which is regulated by SEBI. PhillipCapital (India) Pvt. Ltd. is a subsidiary of Phillip (Mauritius) Pvt. Ltd. References to "PCIPL" in this report shall mean PhillipCapital (India) Pvt. Ltd unless otherwise stated. This report is prepared and distributed by PCIPL for information purposes only and neither the information contained herein nor any opinion expressed should be construed or deemed to be construed as solicitation or as offering advice for the purposes of the purchase or sale of any security, investment or derivatives. The information and opinions contained in the Report were considered by PCIPL to be valid when published. The report also contains information provided to PCIPL by third parties. The source of such information will usually be disclosed in the report. Whilst PCIPL has taken all reasonable steps to ensure that this information is correct, PCIPL does not offer any warranty as to the accuracy or completeness of such information. Any person placing reliance on the report to undertake trading does so entirely at his or her own risk and PCIPL does not accept any liability as a result. Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily an indication to future performance. This report does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors must undertake independent analysis with their own legal, tax and financial advisors and reach their own regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and should understand that statements regarding future prospects may not be realized. In no circumstances it be used or considered as an offer to sell or a solicitation of any offer to buy or sell the Securities mentioned in it. The information contained in the research reports may have been taken from trade and statistical services and other sources, which we believe are reliable. PhillipCapital (India) Pvt. Ltd. or any of its group/ associate/affiliate companies do not guarantee that such information is accurate or complete and it should not be relied upon as such. Any opinions expressed reflect judgments at this date and are subject to change without notice Important: These disclosures and disclaimers must be read in conjunction with the research report of which it forms part. Receipt and use of the research report is subject to all aspects of these disclosures and disclaimers. Additional information about the issuers and securities discussed in this research report is available on request. Certifications: The research analyst(s) who prepared this research report hereby certifies that the views expressed in this research report accurately reflect the research analyst’s personal views about all of the subject issuers and/or securities, that the analyst have no known conflict of interest and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific views or recommendations contained in this research report. The Research Analyst certifies that he /she or his / her family members does not own the stock(s) covered in this research report. Independence: PhillipCapital (India) Pvt. Ltd. has not had an investment banking relationship with, and has not received any compensation for investment banking services from, the subject issuers in the past twelve (12) months, and PhillipCapital (India) Pvt. Ltd does not anticipate receiving or intend to seek compensation for investment banking services from the subject issuers in the next three (3) months. PhillipCapital (India) Pvt. Ltd is not a market maker in the securities mentioned in this research report, although it or its affiliates may hold either long or short positions in such securities. PhillipCapital (India) Pvt. Ltd does not hold more than 1% of the shares of the company(ies) covered in this report. Suitability and Risks: This research report is for informational purposes only and is not tailored to the specific investment objectives,
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