Value investor- India mid & small caps

Bhaskar Chakraborty

Equity Bottom-Up

<ul><li>Induction of senior management from top private banks in the country driving a turnaround in business quality and growth</li><li>Senior management compensation has moved away from the IBA platform enabling talent accretion; compensation structure aligned to shareholders with meaningful ESOP grants</li><li>Loan growth accelerating with focus on retail (39% of loans) and higher rated corporate (38% of loans) under new management</li><li>Slippages and credit costs trending down, limited exposure to challenged sectors allows management to focus on growth</li><li>Adequately capitalized for growth with Tier1 @ 14.7%</li><li>We expect 25% earnings CAGR over FY17-19. ROE should improve from 9.8% in FY17 to 11.4% in FY19. Stock trades at an attractive 1.55x FY19 P/B. We have a target of Rs140 @ 2x FY19 P/B. BUY for 28% upside.</li></ul>

Induction of senior management from top private banks in the country driving a turnaround in business quality and growthSenior management compensation has moved away from the IBA platform enabling talent accretion; compensation structure aligned to shareholders with meaningful ESOP grantsLoan growth accelerating with focus on retail (39% of loans) and higher rated corporate (38% of loans) under new managementSlippages and credit costs trending down, limited exposure to challenged sectors allows management to focus on growthAdequately capitalized for growth with Tier1 @ 14.7%We expect 25% earnings CAGR over FY17-19. ROE should improve from 9.8% in FY17 to 11.4% in FY19. Stock trades at an attractive 1.55x FY19 P/B. We have a target of Rs140 @ 2x FY19 P/B. BUY for 28% upside.

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