Kotak Mahindra Bank (KOTMAH) 686

Result Update Rating matrix Rating : Hold Target : 677 Target Period : 12 months Potential Upside : -1% What s changed? Target Unchanged EPS FY16E Changed from 8 to 10.6 EPS FY17E Changed from 13.1 to 12.8 Rating Unchanged Quarterly performance Crore Q2FY16 Q2FY15 YoY (%) Q1FY16 QoQ (%) NII 1678.7 1535.8 9.3 1598.2 5.0 Other Income 615.7 1053.2-41.5 597.0 3.1 PPP 1044.8 1053.2-0.8 597.0 75.0 PAT 569.5 624.6-8.8 189.8 200.1 Key financials (Merged) crore FY14 FY15 FY16E FY17E NII 5473 6142 6595 7288 PPP 3705 4166 3875 4322 PAT 2165 2477 1932 2331 Valuation summary (Merged) FY14 FY15 FY16E FY17E P/E 72.7 50.3 64.4 53.4 Target P/E 71.8 49.7 63.6 52.8 P/ABV 8.3 5.9 5.5 5.1 Target P/ABV 8.3 5.9 5.6 5.1 RoA 1.5 1.5 1.0 1.0 RoE 13.0 12.1 8.6 9.4 Stock data Market Capitalisation 122884 crore GNPA (Q2FY16) 2655 crore NNPA (Q2FY16) 1168 crore NIM (Q2FY16) 4.3% 52 week H/L 744/532 Equity capital 453 crore Face value 5 DII holding (%) 4.2 FII holding (%) 34.7 Price performance Return % 1M 3M 6M 12M Kotak Mahindra bank 1.0-7.7-3.4 25.3 HDFC Bank 5.7 0.1 9.4 23.7 Axis Bank 2.7-10.0-2.3 24.0 Research Analyst Kajal Gandhi kajal.gandhi@icicisecurities.com Vishal Narnolia vishal.narnolia@icicisecurities.com Vasant Lohiya vasant.lohiya@icicisecurities.com Merger cost behind; synergies ahead November 2, 2015 Kotak Mahindra Bank (KOTMAH) 686 PAT came in higher-than-expected at 570 crore in Q2FY16 (I-direct estimate - 216 crore). The variation was primarily due to lowerthan-expected opex at 1250 crore (I-direct estimate - 1609 crore) along with lower provision. In Q2FY16, the bank incurred 12 crore as integration cost ( 63 crore in Q1FY16) Provision were reported at 176 crore; lower than our estimate of 335 crore. Gross provision came in at 238 crore in Q2FY16, of which a significant portion was contributed by ING Vysya Bank. The 62 crore, accounted in other income, is due to reversal of income on account of credit event of a derivative customer NIM improved ~10 bps QoQ at 4.3% in Q2FY16, which led to 9.3% YoY growth in NII at 1679 crore. The bank has incurred 30 crore in Q2FY16 on realignment of ING Vysya Bank s saving deposits The credit book grew 11.1% YoY to 111662 crore; in line with our estimate of 111561 crore. Deposit accretion came in at 9.3% YoY to 123212 crore with CASA ratio at 36.2% The management has maintained its guidance of incremental 80 bps credit cost in FY16E and combined advance growth of 15-20% in FY16E. Credit book expected to grow at ~18% CAGR in FY16-17E Kotak Mahindra Bank, promoted by Uday Kotak, post receiving a licence in 2002 has grown to a loan book size of 103614 crore in FY15 and built a branch network of 1260 branches. Bank s retail loans form ~50% of total loans, which enabled KMB to earn the best NIM in industry at 4.5-4.9% led by high yielding retail loans. With ING Vysya Bank merger, composition of loan portfolio has been altered with retail advances proportion declining to ~43% from 50%. Accordingly, blended margins of merged business expected to remain benign. Credit book (merged entity) is expected to grow at 17.7% CAGR in FY15-17E to 151149 crore. Savings rate deregulation; raising same to 6% proves beneficial The savings rate was hiked to 6% by KMB post deregulation by the RBI in September 2010. The bank almost tripled its savings deposits from 3331 crore in March 2011 to 14036 crore by March 2015. CASA ratio improved from 28-29% in the past to 32-33% and is seen averaging around 32-34% in the merged bank. For combined entity, post merger, we expect deposit growth at 20.2% CAGR to 177654 crore in FY17E. Strong management, business model, controlled asset quality Asset quality was stable with NNPA ratio of 1% & negligible restructured assets. With the merger, GNPA ratio is seen rising to 2.6%, NNPA ratio to 1.2% in FY16E but overall asset quality remains manageable. PAT in FY15 remained healthy at 1866 crore (24% YoY). Post merger, we expect PAT to grow at 3.6% in FY16E and 20.6% in FY17E to 2331 crore. Maintain HOLD, merger to add strength KMB trades at rich valuations consistently due to its superior return ratios and NIM (RoA of ~1.8% and NIM at ~4.8-5%). Post merger, NIMs and RoA are expected to further dip to ~4.2% and 9.4% in FY17E, respectively. However, they may continue to be better than peers. Factoring in lower than previously estimated merger related integration & provision expense, we have revised our FY16E PAT estimate by ~32%. And thereby revise our target price to 677 (earlier 660), valuing the stock on SOTP basis. Maintaining multiple at 4.0x for bank, we maintain HOLD rating. Synergy benefits are expected to accrue from FY17E with improvement in RoA, which could lead to upward re-rating of the stock. ICICI Securities Ltd Retail Equity Research

Variance analysis Q2FY16 Q1FY16E Q2FY15 YoY (%) Q1FY16 QoQ (%) Comments NII 1,678.7 1,631.7 1,535.8 9.3 1,598.2 5.0 NIM (%) 4.30 4.25 5.00-70 bps 4.20 10 bps QoQ improvement of ~12 bps in NIM due to higher accretion in CASA and substantial proportion of fixed rate book Other Income 615.7 633.9 695.1-11.4 592.4 3.9 Income reversal of 62 crore on account of a credit event related to derivative customer Net Total Income 2,294.5 2,265.6 2,230.8 2.9 2,190.6 4.7 Staff cost 623.0 723.9 590.4 5.5 928.8-32.9 Integration cost of 12 crore in Q2FY16 Other Operating Expenses 626.7 884.7 587.2 6.7 664.9-5.7 PPP 1,044.8 657.0 1,053.2-0.8 597.0 75.0 Provision 176.4 334.7 103.3 70.7 305.3-42.2 PBT 868.4 322.3 949.9-8.6 291.7 197.7 Tax Outgo 298.9 106.4 325.3-8.1 101.9 193.3 PAT 569.5 216.0 624.6-8.8 189.8 200.1 Impact of 238 crore in Q2FY16 of which a significant portion is from ING Vysya Bank PAT growth came in higher-than-expected due to lower opex and provision Key Metrics GNPA 2,655.4 2,542.9 1,801.2 47.4 2,421.8 9.6 GNPA increased 4 bps QoQ to 2.35% NNPA 1,167.6 1,131.2 776.7 50.3 1,077.3 8.4 NNPA was at 1.05%; up 1 bps QoQ Total Restructured assets 403.0 41.7 160.0 151.9 418.0-3.6 Standard RA at 403 crore of which 256 crore is from ING Vysya Bank Change in estimates FY16E FY17E ( Crore) Old New % Change Old New % Change Comments Net Interest Income 6,537.8 6,594.9 0.9 7,247.0 7,288.4 0.6 Pre Provision Profit 3,424.3 3,874.7 13.2 4,278.1 4,322.1 1.0 NIM (%) 3.6 3.6 3 bps 3.5 3.5 1 bps PAT 1,456.9 1,932.4 32.6 2,369.5 2,331.2-1.6 PAT estimate revised upwards led by lower opex and provision estimates ABV ( ) 119.6 121.2 1.4 128.5 132.3 3.0 Assumptions FY14 FY15 FY16E FY17E FY16E FY17E Comments Credit growth (%) 9.4 24.8 92.5 18.7 92.2 18.7 Deposit growth (%) 15.8 26.7 97.9 19.9 97.3 19.9 CASA ratio (%) 32.5 35.4 35.8 35.5 36.0 35.6 NIM calculated (%) 4.5 4.5 3.6 3.5 3.6 3.5 Cost to income ratio (%) 49.7 52.1 59.0 59.2 64.4 60.3 Reduced C/I estimate in anticipation of lower incremental integration cost GNPA ( crore) 1,703.8 2,010.4 3,173.7 3,891.8 3,615.9 4,371.3 NNPA ( crore) 675.7 779.8 1,488.0 1,854.6 1,819.6 2,544.1 Slippage ratio (%) 1.6 1.0 1.3 1.2 1.7 1.3 Credit cost (%) 0.4 0.3 0.8 0.5 0.9 0.4 Management guidance at 80 bps for credit cost for FY16E Current Earlier ICICI Securities Ltd Retail Equity Research Page 2

[ Going ahead, the management has guided 15-20% growth in advance in FY16E. Company Analysis Business aspects Kotak Mahindra Bank has a presence across all financial verticals, viz. banking, securities, investment banking, asset management, consumer finance and life insurance. The company has a diversified product offering and an experienced management. In the past six years, credit and deposit CAGR has been 26% and 29%, respectively, at 66161 crore and 74860 crore by FY15, higher than industry averages. Kotak Bank has largely been a retail lender with 64% of its loan book in retail in FY10. It has now moderated to 44% in FY15. In FY15, credit grew 24.8% YoY and deposits 26.7% YoY. In FY15, advances growth recovered with corporate banking loans surging 26% YoY while overall growth was 24.8% YoY to 66161 crore. Ex CV/CE, growth was 28.2% YoY. Deposits grew a strong 26.7% YoY to 74860 crore. Post merger, Kotak Bank s loan book was at 111662 crore with alteration in composition of loan portfolio. Retail advances proportion declined to ~43% from 50%. Going ahead, we expect credit offtake at 17.7% CAGR in FY15-17E to 151149 crore. Exhibit 1: On YoY basis healthy business growth 210000 180000 ( crore) 150000 120000 90000 60000 88856 100289 95101 103676 100506 112755 105198 119018 109155 122968 103614 116812 111662 123212 127383 148137 151149 177654. 30000 0 FY14 Q1FY15 Q2FY15 Q3FY15 FY15 1QFY16 2QFY16 FY16E FY17E Advances Deposits Source: Company quarterly earnings update, ICICIdirect.com Research Retail loans now constitute ~43.6% of total credit in standalone whereas due to auto loans of Kotak Prime, in consolidated, retail forms ~43% of total credit of 125522 crore as on FY15. Exhibit 2: Loan book movement over years (standalone) crore Q1FY14 Q2FY14 Q3FY14 FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Growth yoy (%) CVs and contruction eqmt. 7508 6781 6005 5441 5104 5062 5027 5204 5626 6123 21.0 Personal Loans incl small busines 2940 3082 3156 4632 4723 5301 5929 6263 7429 8171 54.1 Home loans 11030 11307 11454 12100 12312 12894 13738 14709 20756 21697 68.3 Corporate banking 14849 14759 16621 14337 18568 21140 22044 20299 31205 33909 60.4 Agricultural finance 7841 7910 9023 10468 9941 10137 10849 12106 15268 17112 68.8 Others 6371 6770 6890 6010 706 759 7054 1158 1854 2034 168.0 Total 50539 50609 53149 52988 56922 55293 64641 66161 103614 111662 101.9 KMB earned best NIM in industry at 4.7-5% led by high yielding retail loans and working capital corporate loans. NII has grown from 1858 crore in FY10 to 4224 crore by FY15 supported by strong credit and savings deposit growth. Post merger, NIM has declined to 4.2% in Q1FY16, owing to a decline in proportion of high yield retail credit and higher interest outgo on saving account of ING Vysya Bank. However, in Q2FY16, NIM improved 12 bps QoQ due to lower cost of deposit led by higher accretion in CASA at 36.2%. Going ahead, a change in loan mix is expected to keep blended margins benign. However, with faster addition to saving account and substantial proportion of fixed rate book with ICICI Securities Ltd Retail Equity Research Page 3

southward movement in interest rates, we expect NIM to remain broadly stable in the range of 4.0-4.2% in FY16-17E. Further, as integration benefits unfold with proportion of retail advances rising in overall book, NIMs are expected to revive and inch up. This has currently not been factored in by us. Exhibit 3: Increase in NIM led by higher CASA accretion 5.2 5.0 (%) 4.8 4.6 4.4 4.2 4.0 4.8 4.8 4.8 4.9 4.9 4.9 4.8 4.2 4.3 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Series1 Q4FY14 Q1FY15 Q2FY15 Q3FY15 FY15 Q1FY16 Q2FY16 Source: Company quarterly earnings update, ICICIdirect.com Research Deposit franchise (branches) build-up gradually enabled KMB to maintain healthy margins of >4.5% since FY08 despite a challenging environment. In the past two or three years due to higher focus on savings deposits, CASA has been stable at 31% wherein other banks saw a decline in CASA. The combined branch network post merger was at 1269 as of September 2015. With strong CASA deposits growth at 24% YoY to 44657 crore, branches are expected to deliver a strong performance over time. Initial cost was incurred on the employees and set-up upfront. We expect deposits to grow at 20.2% CAGR to 177654 crore in FY17E. Exhibit 4: Branch network grows to 1269 branches to support CASA accretion 1400 1200 1000 800 600 400 200 0 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Source: Company quarterly earnings update, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 4

Other income growth remains strong Non interest income has grown 44.9% to 2028 crore in FY15. Core fee income and treasury gains enabled the bank to achieve stronger other income. Q2FY16 saw a decline of 11.4% YoY in non interest income to 616 crore mainly led by lower treasury income, which was impacted by 62 crore on account of the credit event of a derivative customer. Also, a change in mutual fund fee recognition from upfront to over the life, has led to lower fee income. We expect non-interest income traction to remain slower in FY16E and then pick up in FY17E. Hence, we expect 5.9% CAGR in FY16-17E to 3294 crore. Strong management, business model and controlled asset quality KMB s asset quality has been one of the most stable with NNPA ratio of ~1% and negligible restructured assets. This depicts the strong operational business model of the bank and the management having full control. Exhibit 5: NPA levels maintained at comfortable levels 3.0 Kotak Bank has identified total stress to the tune of 6% in erstwhile ING Vysya Bank s book, which constitutes 2.5% of the merged entity (%) 2.6 2.2 1.8 1.4 1.0 0.6 0.2 2.5 2.3 2.4 2.6 2.0 2.0 2.0 2.0 1.9 1.9 1.9 1.9 1.6 1.5 1.6 1.6 1.6 1.5 1.6 0.6 0.6 0.6 0.8 1.0 1.1 1.0 1.1 1.0 1.0 1.0 0.9 1.0 1.1 1.2 1.2 0.8 0.6 0.6-0.2 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 GNPA Q2FY14 Q3FY14 Q4FY14 Q1FY15 NNPA Q2FY15 Q3FY15 FY15 Q1FY16 Q2FY16 FY16E FY17E Source: Company quarterly earnings update, ICICIdirect.com Research GNPA surged QoQ by ~40 bps at 2.3% in Q1FY16 owing to merger related incremental addition of stressed assets. Kotak Bank has identified total stress to the tune of 6% in erstwhile ING Vysya Bank s book, which constitutes 2.5% of the merged entity. In Q2FY16, asset quality remained resilient with GNPA at 2.35%; sequential increase of 4 bps. Standard restructured loans stood at 403 crore (0.4% of net advances) owing to 256 crore from the erstwhile ING Vysya Bank. We expect GNPA and NNPA ratios to inch up at 2.6% and 1.2%, respectively, by FY17E. Credit cost is expected to remain higher at 80 bps (annualised) in FY16E and then come down at 0.5% (annualised) in FY17E (the management indicated at an additional 50 bps credit cost on account of integration). ICICI Securities Ltd Retail Equity Research Page 5

Healthy performance of consolidated entity Exhibit 6: Consolidated profit over the years, ex bank other subsidiaries form ~40% of PAT Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Kotak Bank 260 276 297 282 280 362 436 403 353 340 407 430 626 611 527 191 570 Kotak Securities 29 24 50 23 40 38 *13 31 40 46 44 68 66 60 96 67 78 Kotak Mahindra Capital -4 4 5 6 4 2 4 4-2 7 5-4 -7-6 30 3 7 Kotak Prime 90 104 97 94 114 105 119 117 125 123 126 120 125 120 143 119 127 Kotak AMC & Trust 7 3 3 4-5 11 2 7 17 12 4 0-1 -10-18 20 23 International Subsidiaries -7-4 3-5 8 5-1 -10 1 9 6 7 13 14 18 25 32 Kotak Investment advisors 8 7 10 8 9 6 8 1 4 7 5 8 4 2 11 0 0 Kotak Mahindra Investments 3 3 6 4 16 8 5 4 11 11 16 17 25 24 40 30 36 Kotak Mahindra Old Mutual 53 47 57 32 47 53 58 71 44 60 65 49 52 51 76 66 48 Total (net off aflliates/minority) 433 464 528 443 502 577 666 627 583 591 678 695 899 863 913 518 942 Exhibit 7: Profitability performance at consolidated level PAT ( crore) Q2FY16 Q2FY15 YOY (%) Q1FY16 QoQ (%) Kotak Bank 569.5 625.6-9.0 190.8 198.5 Kotak Securities 78.0 66.0 18.2 67.0 16.4 Kotak Mahindra Capital 7.0-7.0 NA 3.0 NA Kotak Prime 127.0 125.0 1.6 119.0 6.7 Kotak AMC & Trust 23.0-1.0 NA 20.0 NA International Subsidiaries 32.0 13.0 NA 25.0 28.0 Kotak Investment advisors 0.0 4.0 NA 0.0 NA Kotak Mahindra Investments 36.0 25.0 44.0 30.0 20.0 Kotak Mahindra Old Mutual 48.0 52.0-7.7 66.0-27.3 Total (net off equity aflliates/minority) 941.5 898.6 4.8 517.8 81.8 Source: Company quarterly earnings update, ICICIdirect.com Research Kotak Prime The overall loan book has increased nearly four times in seven years from 5615 crore to 20013 crore in Q2FY16. Kotak Prime, the next highest profit making segment, grew tepidly with loan growth of 6.3% YoY to 20013 crore in Q2FY16 while car loans within the same grew 13% YoY to 15754 crore, thereby running down erstwhile real estate exposure. PAT came in flat YoY 127 crore. Exhibit 8: Kotak Mahindra Prime profitability on slower track Crore Q2FY16 Q1FY16 Q2FY15 YoY Gr. (%) QoQ Gr. (%) PBT 195.0 183.0 190.0 2.6 6.6 PAT 127.0 119.0 125.0 1.6 6.7 Loans 20013.0 19728.0 18819.0 6.3 1.4 -car loans in same 15754.0 15070.0 13946.0 13.0 4.5 CAR (%) 18.3 18.3 - - ROA (%) 2.5 2.5 - - NET NPA -cars (%) 0.4 0.5 - - Source: Company quarterly earnings update, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 6

Exhibit 9: Kotak Prime second highest profit contributor Q2FY16 Q1FY16 Q4FY15 Q3FY15 Q2FY15 Q1FY15 Q4FY14 Q3FY14 Q2FY14 Q1FY14 Q4FY13 Q3FY13 Q2FY13 Q1FY13 Q4FY12 PBT 195 183 218 183 190 183 192 190 191 179 174 158 170 139 143 PAT 127 119 143 120 125 120 126 123 125 117 119 105 114 94 97 Loans 20013 19728 19707 19073 18819 17693 17371 16858 16952 17093 17022 16042 15173 14114 13386 -car loans 15754 15070 14726 14234 13946 13418 13273 13066 13136 13055 12777 12237 11756 11154 10577 CAR 18.3 18.3 18.3 17.3 17.7 17 17.7 17.1 16.4 16 15.4 15.8 15.8 15.9 16.3 ROA 2.5 2.5 2.5 2.3 2.5 2.5 2.6 2.6 2.6 2.5 2.6 2.4 2.8 2.4 2.9 Net NPA -cars 0.40% 0.5% 0.4% 0.4% 0.3% 0.3% 0.3% 0.4% 0.3% 0.2% 0.2% 0.2% 0.2% 0.1% 0.2% Kotak Securities Kotak Securities (K-Sec), a KMB subsidiary, has been one of the large stock broking firms offering both retail and institutional services. It had 9% market share in FY07, which declined to as low as 2.7% currently on account of rising options volume generating lower yields and relative lower push by the broker in the same. The company clocked an average daily turnover of 3,720 crore in FY07 and was at 3920 crore in FY14, which rose to 7593 crore in Q2FY16 on the back of increased volumes in industry. The end of the JV with Goldman Sachs in May 2006 has not made any meaningful impact on its market share. Competition intensified in the recent past in the Indian broking space, which resulted in a fall in broking yields for all players. Exhibit 10: Average daily turnover trend 9000 8000 7000 6000 5000 4000 3000 2000 3800 3600 3925 4522 5205 4648 3582 4261 4160 4137 3300 3343 3673 3814 3692 4248 3720 3903 6053 6621 8372 8372 7813 7593 1000 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 ( Crore) Q2FY16 Exhibit 11: Market share in average daily volume surges in Q2FY16 (reported) 4.5 4 4.3 3.9 3.8 3.7 3.8 The market share of Kotak Securities remained at 2.7% in 3.5 3.5 Q2FY16 (%) 3 2.5 2 3.0 2.9 2.9 2.9 2.7 2.5 2.5 2.6 2.5 2.4 2.4 2.3 2.2 2.9 2.7 2.82.85 2.7 2.7 Q2FY10 Q3FY10 Q4FY10 Q1FY11 Q2FY11 Q3FY11 Q4FY11 Q1FY12 Q2FY12 Q3FY12 Q4FY12 Q1FY13 Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14 Q1FY15 Q2FY15 Q3FY15 Q4FY15 Q1FY16 Q2FY16 Source: Company quarterly earnings update, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 7

In Q2FY16, Kotak Securities clocked 20.5% YoY growth in topline at 270 crore on healthy daily volume of 7593 crore vs. 6621 crore in Q2FY15. PAT came in at 78 crore; up 16.4% YoY owing to higher top-line during the quarter. Kotak Mahindra Old Mutual Life Insurance is a 74:26 JV between Kotak Mahindra Bank and Old Mutual Life. Kotak Life had managed to capture market share of ~3%. It recorded 74% CAGR in annualised premium equivalent (APE) over FY04-07. Post FY09, after which growth collapsed, annualised premium equivalent (APE) has been hovering around 1000 crore till now. Annual profits touched around 229 crore as on FY15 growing from 14 crore in FY09. The life insurance performance has stabilised with traction returning in terms of new business premium accretion. After de-growing in FY14, new business premium surged 39.3% YoY to 461 crore. Q2FY16 PAT was at 48 crore led by strong individual premium growth. On APE (Single @ 1/10th) basis, Kotak Bank s share for Q2FY16 is 48% (Q2FY15 33%) for first year individual premium Exhibit 12: Life insurance business statistics on APE basis market share is 48% Premium ( crore) Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Renewal 334.0 527.0 240.0 337.0 350.0 571.0 Indvl Regular 101.0 186.0 58.0 111.0 133.0 301.0 124.0 202.0 Group 127.0 205.0 134.0 170.0 159.0 328.0 248.0 239.0 Single 37.0 88.0 26.0 50.0 26.0 46.0 16.0 20.0 New Business Premium 265.0 479.0 218.0 331.0 318.0 675.0 388.0 461.0 APE 231.7 399.8 194.6 286.0 294.6 633.6 373.6 443.0 Solvency Ratio (%) 3.2 3.2 3.1 3.0 3.0 3.1 3.2 3.2 PAT 60.0 65.0 49.0 52.0 51.0 76.0 66.0 48.0 Source: Company quarterly earnings update, ICICIdirect.com Research Kotak Mahindra Asset Management Kotak AMC has grown its average AUM at 21% CAGR to 38600 crore by FY07-15. Its share of equity in total has been rising gradually from 14% in FY09 to 24% in FY14. In Q2FY16, average AUM grew 50.3% YoY to 56751 crore. This has helped in improving profitability to 23 crore in Q2FY16 vs. loss of 1 crore in Q2FY15. Kotak Mahindra Capital (KMCC) The Kotak Mahindra Group carries on its investment banking business through Kotak Mahindra Capital Company (KMCC), a subsidiary of Kotak Mahindra Bank (KMB). Kotak bought the 25% stake held by Goldman Sachs in KMCC in May 2006 by paying 210 crore, making it a 100% subsidiary. KMCC has a strong presence in managing equity issuances and advising on M&A transactions and has benefited largely from the boom in investment banking activity in India. The company de-merged its principal and trading investments division (including primary dealership) in March 2007 (to free up surplus capital) and now primarily operates as a full service investment bank, offering advisory and transactional services. It earned revenue of 29 crore and PAT of 7 crore in Q2FY16. ICICI Securities Ltd Retail Equity Research Page 8

Outlook and valuation KMB has been trading at rich valuations consistently due to its superior return ratios with FY15 RoA of 1.9%. It earns highest NIM in the industry. This depicts its strong operational business model and management having full control via consistent performance. With the ING Vysya Bank merger, the bank brought down promoter stake from 40% to 34% and also added value and geographical synergies in the company. Post merger, NIMs and RoA are expected to further dip to ~4.2% and 9.4%, respectively, in FY17E. However, they will continue to remain better than peers. Factoring in lower than previously estimated merger related integration and provision expense, we have revised our FY16E PAT estimate by ~32%. We revise our target price to 677 (earlier 660), valuing the stock on SOTP basis. Maintaining multiple at 4.0x for bank, thereby we maintain our HOLD rating. Synergy benefits are expected to accrue from FY17E with improvement in RoA, which could lead to upward re-rating of the stock. Exhibit 13: DuPont Analysis (Bank standalone) FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E FY17E Net interest income/ avg. total assets 5.1 5.3 5.6 4.8 4.3 4.6 3.8 3.8 3.5 3.2 Non-interest income/ avg. total assets 1.9 1.0 1.9 1.8 1.7 1.8 1.6 1.8 1.5 1.5 Non-operating profit/ avg. total assets 7.0 6.3 7.5 6.5 6.0 6.5 5.4 5.6 5.0 4.7 Operating expenses/ avg. total assets 4.2 4.2 3.6 3.5 3.1 3.4 2.8 3.0 2.9 2.8 Operating profit/ avg. total assets 2.8 2.1 3.9 3.0 2.8 3.1 2.6 2.6 2.0 1.9 Provisions/ avg. total assets 1.1 0.6 1.5 0.3 0.1 0.3 0.3 0.3 0.5 0.4 Return on avg. total assets 1.2 1.0 1.7 1.9 1.9 1.9 1.5 1.5 1.0 1.0 Leverage 9.3 7.8 8.0 7.8 7.9 9.3 8.6 7.9 8.4 9.1 Return on equity 11.4 7.5 13.5 14.5 14.7 17.9 13.0 12.1 8.6 9.4 Exhibit 14: Valuation FY14 FY15 FY16E FY17E EPS ( ) 9.4 13.6 10.6 12.8 Growth (%) 1.2 44.6-22.0 20.6 P/E (x) 72.7 50.3 64.4 53.4 ABV 81.3 114.7 121.2 132.3 P/ABV (x) 8.3 5.9 5.5 5.1 GNPA (%) 1.9 1.8 2.5 2.6 RoNA (%) 1.5 1.5 1.0 1.0 RoE (%) 13.0 12.1 8.6 9.4 Exhibit 15: Valuation ( ) Merged Entity Company Value / share KMB (Merged entity) 537 Kotak Life 23 Kotak Mahindra Prime 63 Kotak Mahindra Capital 11 Kotak Securities 30 Kotak AUM 12 677 ICICI Securities Ltd Retail Equity Research Page 9

Merged entity will have 441 branches in the Top 8 cities Details about merger with ING Vysya Bank (September 2014) Effective April 1, 2015, ING Vysya Bank will merge with Kotak Bank as it has received CCI and RBI approval for an all-stock amalgamation among the banks. Post merger, Kotak Mahindra Bank will become the fourth largest private bank with branches at 1261, business size of 230000 crore, employees at ~40000 and customers at ~10 million. With ~15.2% dilution of equity share capital, promoter holding in Kotak Mahindra Bank is expected to decline to 34% from 40% currently, in line with RBI s direction to bring down their holding to 30% by December 2016 and 20% by March 2018. Rationale for deal 1. The merger would give Kotak Bank a deeper presence in southern India as ING Vysya has two-third of its 577 branches in south. Kotak Bank has 79% of its 684 branches in western & northern region. Thus, the merger provides larger presence with minimum overlap 2. The merger would yield more liquidity with significant foreign headroom in Kotak Bank even post merger, with foreign shareholding at ~47% in the merged entity. The management indicated that they will apply to RBI for raising the foreign holding limit to 74% from 49% currently 3. The merger will allow Kotak Mahindra Bank to leverage on large international corporates in India with access to overseas relationships of ING Group 4. The merger is also beneficial on the liability front as both banks have CASA ratio of ~31%. Owing to strong SME business, ING Vysya s CA float is healthy. Further, there is large scope for garnering savings balances as Kotak Bank offers a higher rate of 5.5-6% Owing to lower NIMs and higher CI ratio of ING Vysya Bank, Kotak s banking business RoA is expected to decline to ~1.0% from 1.8% immediately. RoA can further be maintained at 1.0% in FY15-17E. However, we believe the benefits of merger synergies will accrue over time, which will enable the merged entity to clock healthy return ratios post FY17E. Exhibit 16: Combined branch network (FY15) status (Total ~1261) Branches ING Vysya Kotak Bank Kotak (Merged) West 13% 46% 31% North 22% 33% 28% South 61% 15% 36% East 4% 6% 5% Exhibit 17: Advances mix (Q3FY15) % ING Kotak Bank Merged Agri 11 12 12 SME 38 7 17 Large corporates 39 31 33 Retail 19 50 40 ICICI Securities Ltd Retail Equity Research Page 10

Company snapshot 800 700 600 Target Price: 677 500 400 300 200 100 0 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event Mar-03 Promoter stake was at 63% in the bank, post incorporation in 2002 May-05 Announced bonus shares May-07 In peak market, capital market related businesses were doing well and getting higher valuation multiples. Bank's market cap share in total market used tobe less FY08 Announced stock split, FV reduced to 5 from 10 Jun-09 Anand Mahindra ceased to be a promoter of the bank Feb-11 Bank aspired to be national, inorganic (route) is something that was on radar also. Thereafter, the stock saw a new rally and is rising continuously Oct-11 Savings rate de-regulated by RBI, Kotak Bank offered higher interest rate of 6% above 1 lakh and 5% below 1 lakh vs the floor of 4%. This has been very helpful in saving balance increase as it started adding 600-800 crore in a quarter post this hike. Mar-12 Asset quality maintained even with a large commercial vehicle and construction equipment portfolio Jul-12 RBI asked promoters of Kotak Mahindra Bank to cut their stake in the bank to 20% from 45 % by 2018. With expectation of continuous dilution at higher multiple of BV, stock price remained on an uptrend May-13 G-sec yields spiked post Fed announcement on May 22 of its intention to taper QE and tight liquidity measures by RBI of MSF rate hike etc, impacted banks, particularly wholesale funded however Kotak Bank although being lower on CASA remained resilient Oct-13 Post liquidity tightening measures like MSF reversed by RBI, stock saw respite Nov-14 Announced merger with ING Vysya Bank in ratio of 725 shares of Kotak bank for 1000 shares of ING Vysya Bank Jan-15 Merger approved by shareholders Apr-15 Scheme of amalgamation of Kotak Mahindra Bank and ING Vysya Bank comes into effect from April 1, 2015 Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m) Change (m) (in %) Jun-14 Sep-14 Dec-14 Jun-15 Sep-15 1 Kotak (Uday Suresh) 30-Jun-15 33.52 612.5 0.0 Promoter 40.33 40.07 40.05 33.86 33.77 2 ING Bank N.V. 30-Jun-15 6.45 117.9 117.9 FII 35.09 34.61 35.09 35.32 34.67 3 Capital International, Inc. 30-Jun-15 5.86 107.1 34.6 DII 1.78 2.01 2.03 3.69 4.22 4 CPP Investment Board 30-Jun-15 3.93 71.7 0.0 Others 22.80 23.31 22.66 27.13 27.34 5 Sumitomo Mitsui Banking Corp 30-Jun-15 3.59 65.6 0.0 6 First State Investment Management (UK) Limited 30-Jun-15 2.02 37.0-3.1 7 Genesis Investment Management, LLP 31-May-15 1.93 35.3 0.0 8 Caladium Investments Pte. Ltd. 30-Jun-15 1.64 30.0-10.0 9 Mahindra (Anuradha) 30-Jun-15 1.44 26.4-0.5 10 Matthews International Capital Management, L.L.C. 30-Jun-15 1.15 21.0-7.5 Source: Reuters, ICICIdirect.com Research Recent Activity ( crore and shares in mn) Buys Sells Investor name Value Shares Investor name Value Shares ING Bank N.V.,284.59m 117.90m Caladium Investments Pte. Ltd. -108.96m -10.00m Capital International, Inc. 377.43m 34.64m Matthews International Capital Management, L.L.C. -81.72m -7.50m Capital Research Global Investors 211.08m 19.37m Lyxor Asset Management -33.55m -3.31m Birla Sun Life Asset Management Company Ltd. 91.63m 8.35m Kotak Mahindra Asset Management Company Ltd. -28.36m -3.20m Norges Bank Investment Management (NBIM) 37.83m 3.77m First State Investment Management (UK) Limited -27.44m -3.08m Source: Reuters, ICICIdirect.com Research ICICI Securities Ltd Retail Equity Research Page 11

Financial summary Profit and loss statement Crore (Year-end March) FY14 FY15 FY16E FY17E Interest Earned 8767.1 9719.9 17550.4 20141.1 Interest Expended 5047.1 5496.1 10955.5 12852.7 Net Interest Income 3720.0 4223.8 6594.9 7288.4 growth (%) 16.0 13.5 56.1 10.5 Non Interest Income 1399.7 2028.4 2861.1 3293.7 Net Income 5119.8 6252.2 9455.9 10582.1 Operating expense 2542.7 3254.7 5581.3 6260.0 Gross profit 2577.1 2997.5 3874.7 4322.1 Provisions 304.7 164.5 1032.9 842.7 Taxes 770.0 966.9 909.3 1148.2 Net Profit 1502.4 1866.1 1932.4 2331.2 growth (%) 10.4 24.2 3.6 20.6 EPS 19.5 12.1 10.6 12.8 Key Ratios (Year-end March) FY14 FY15 FY16E FY17E Valuation No. of Equity Shares 77.0 154.5 181.7 181.7 EPS ( ) 19.5 12.1 10.6 12.8 BV ( ) 159.4 91.3 129.4 142.5 BV-ADJ ( ) 151.9 87.4 121.2 132.3 P/E 71.2 114.9 64.4 53.4 P/BV 9.1 15.9 5.7 5.2 P/ABV 9.0 15.6 5.5 5.1 Yields & Margins (%) Yield on avg earning assets 10.6 10.4 9.7 9.6 Avg. cost on funds 6.9 6.8 6.7 6.6 Net Interest Margins 4.5 4.5 3.6 3.5 Avg. Cost of Deposits 6.9 6.7 6.7 6.7 Yield on average advances 13.2 12.5 11.6 11.5 Quality and Efficiency (%) Cost / Total net income 49.7 52.1 59.0 59.2 Credit/Deposit ratio 89.8 88.4 86.0 85.1 GNPA 2.0 1.9 2.5 2.6 NNPA 1.1 0.9 1.2 1.2 ROE 13.8 14.1 8.6 9.4 ROA 1.8 1.9 1.0 1.0 Balance sheet Crore (Year-end March) FY14 FY15 FY16E FY17E Sources of Funds Capital 385.2 386.2 454.2 454.2 ESOPS 8.5 3.0 8.5 8.5 Reserves and Surplus 11889.9 13722.6 23059.8 25429.6 Networth 12283.5 14111.8 23522.5 25892.2 Deposits 59072.3 74860.4 148136.6 177654.1 Borrowings 12895.6 12149.8 26552.8 31407.2 Other Liabilities & Provisions 3333.8 4858.1 7113.4 7469.0 Total 87585.2 105980.0 205325.3 242422.6 Applications of Funds Fixed Assets 1106.9 1206.7 1917.7 2062.0 Investments 25484.5 30422.1 54937.5 60959.7 Advances 53027.5 66160.5 127383.4 151149.2 Other Assets 1972.3 1928.4 9407.3 14498.5 Cash with RBI & call money 5979.9 6262.4 12716.9 14953.8 Total 87571.1 105980.0 206362.8 243623.3 Growth ratios (Year-end March) FY14 FY15 FY16E FY16E Total assets 4.6 21.0 94.7 18.1 Advances 9.4 24.8 92.5 18.7 Deposits 15.8 26.7 97.9 19.9 Total Income 10.5 15.6 73.7 14.8 Net interest income 16.0 13.5 56.1 10.5 Operating expenses 15.1 28.0 71.5 12.2 Operating profit 30.7 16.3 29.3 11.5 Net profit 10.4 24.2 3.6 20.6 Book value 29.9 14.9 41.7 10.1 EPS 7.0-38.1-11.9 20.6 *Figures for FY14 and FY15 may not be comparable due to merger ICICI Securities Ltd Retail Equity Research Page 12

ICICIdirect.com coverage universe (Banks) CMP M Cap EPS ( ) P/E (x) P/ABV (x) RoA (%) RoE (%) Sector / Company ( ) TP( ) Rating ( Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E Bank of India (BANIND) 130 125 Sell 8,063 26 18 26 5.1 7.4 4.9 0.8 0.8 0.7 0.3 0.2 0.3 6 4 6 Bank of Baroda (BANBAR) 158 190 Hold 35,008 15 19 21 10.3 8.5 7.5 1.1 1.1 1.0 0.5 0.6 0.6 9 10 10 Punjab National Bank (PUNBAN) 129 129 Hold 23,263 17 16 19 7.8 8.1 6.7 1.1 1.0 0.9 0.5 0.5 0.5 8 8 9 State Bank of India (STABAN) 237 300 Buy 176,863 16 19 22 14.6 12.7 11.0 1.8 1.5 1.4 0.6 0.7 0.7 10 11 11 Indian Bank (INDIBA) 126 174 Buy 5,409 21 23 28 6.0 5.6 4.5 0.5 0.5 0.5 0.5 0.5 0.6 7 7 9 Axis Bank (AXIBAN) 477 600 Buy 113,216 31 35 42 15.4 13.7 11.4 2.6 2.2 1.9 1.7 1.7 1.7 18 17 17 City Union Bank (CITUNI) 89 105 Buy 5,339 6 7 8 13.9 12.6 10.9 2.2 1.9 1.7 1.4 1.4 1.5 16 15 15 DCB Bank (DCB) 87 92 Sell 2,265 7 6 4 12.9 15.4 21.1 1.7 1.6 1.5 1.3 0.9 0.6 15 10 7 Federal Bank (FEDBAN) 55 60 Hold 9,459 6 5 5 9.4 11.6 10.2 1.3 1.3 1.2 1.3 0.9 0.9 14 10 11 HDFC Bank (HDFBAN) 1,087 1,220 Buy 271,625 41 49 61 26.7 22.1 17.8 4.5 3.8 3.2 1.9 1.9 1.9 19 18 19 IndusInd Bank (INDBA) 908 1,050 Buy 52,874 34 39 50 26.8 23.0 18.3 4.6 3.1 2.7 1.8 1.9 2.0 18 16 15 Jammu & Kashmir Bk(JAMKAS) 84 98 Hold 4,065 10 16 20 8.0 5.2 4.2 0.8 0.8 0.7 0.7 1.0 1.1 9 12 14 Kotak Mahindra Bank (KOTMAH) 686 677 Hold 125,408 14 11 13 50.3 64.4 53.4 6.0 5.7 5.2 1.5 1.0 1.0 12 9 9 South Indian Bank (SOUIN0) 20 23 Hold 2,759 2 3 3 9.0 7.6 6.5 0.9 0.9 0.8 0.5 0.6 0.6 9 10 11 Yes Bank (YESBAN) 763 850 Buy 31,992 48 57 67 15.9 13.3 11.4 2.7 2.4 2.0 1.6 1.6 1.6 21 19 19 ICICI Securities Ltd Retail Equity Research Page 13

RATING RATIONALE ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns ratings to its stocks according to their notional target price vs. current market price and then categorises them as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional target price is defined as the analysts' valuation for a stock. Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction; Buy: >10%/15% for large caps/midcaps, respectively; Hold: Up to +/-10%; Sell: -10% or more; Pankaj Pandey Head Research pankaj.pandey@icicisecurities.com ICICIdirect.com Research Desk, ICICI Securities Limited, 1 st Floor, Akruti Trade Centre, Road No. 7, MIDC, Andheri (East) Mumbai 400 093 research@icicidirect.com ICICI Securities Ltd Retail Equity Research Page 14

ANALYST CERTIFICATION We /I, Kajal Gandhi, CA, Vasant Lohiya, CA and Vishal Narnolia, MBA Research Analysts, authors and the names subscribed to this report, hereby certify that all of the views expressed in this research report accurately reflect our views about the subject issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report. Terms & conditions and other disclosures: ICICI Securities Limited (ICICI Securities) is a Sebi registered Research Analyst having registration no. INH000000990. ICICI Securities Limited (ICICI Securities) is a full-service, integrated investment banking and is, inter alia, engaged in the business of stock brokering and distribution of financial products. ICICI Securities is a wholly-owned subsidiary of ICICI Bank which is India s largest private sector bank and has its various subsidiaries engaged in businesses of housing finance, asset management, life insurance, general insurance, venture capital fund management, etc. ( associates ), the details in respect of which are available on www.icicibank.com. ICICI Securities is one of the leading merchant bankers/ underwriters of securities and participate in virtually all securities trading markets in India. We and our associates might have investment banking and other business relationship with a significant percentage of companies covered by our Investment Research Department. ICICI Securities generally prohibits its analysts, persons reporting to analysts and their relatives from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. The information and opinions in this report have been prepared by ICICI Securities and are subject to change without any notice. The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent of ICICI Securities. While we would endeavour to update the information herein on a reasonable basis, ICICI Securities is under no obligation to update or keep the information current. Also, there may be regulatory, compliance or other reasons that may prevent ICICI Securities from doing so. Non-rated securities indicate that rating on a particular security has been suspended temporarily and such suspension is in compliance with applicable regulations and/or ICICI Securities policies, in circumstances where ICICI Securities might be acting in an advisory capacity to this company, or in certain other circumstances. This report is based on information obtained from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. ICICI Securities will not treat recipients as customers by virtue of their receiving this report. Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances. The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment objectives, financial positions and needs of specific recipient. This may not be taken in substitution for the exercise of independent judgment by any recipient. The recipient should independently evaluate the investment risks. The value and return on investment may vary because of changes in interest rates, foreign exchange rates or any other reason. ICICI Securities accepts no liabilities whatsoever for any loss or damage of any kind arising out of the use of this report. Past performance is not necessarily a guide to future performance. Investors are advised to see Risk Disclosure Document to understand the risks associated before investing in the securities markets. Actual results may differ materially from those set forth in projections. Forward-looking statements are not predictions and may be subject to change without notice. ICICI Securities or its associates might have managed or co-managed public offering of securities for the subject company or might have been mandated by the subject company for any other assignment in the past twelve months. ICICI Securities or its associates might have received any compensation from the companies mentioned in the report during the period preceding twelve months from the date of this report for services in respect of managing or co-managing public offerings, corporate finance, investment banking or merchant banking, brokerage services or other advisory service in a merger or specific transaction. ICICI Securities or its associates might have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the companies mentioned in the report in the past twelve months. ICICI Securities encourages independence in research report preparation and strives to minimize conflict in preparation of research report. ICICI Securities or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ICICI Securities nor Research Analysts have any material conflict of interest at the time of publication of this report. It is confirmed that Kajal Gandhi, CA, Vasant Lohiya, CA and Vishal Narnolia, MBA, Research Analysts of this report have not received any compensation from the companies mentioned in the report in the preceding twelve months. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. ICICI Securities or its subsidiaries collectively or Research Analysts do not own 1% or more of the equity securities of the Company mentioned in the report as of the last day of the month preceding the publication of the research report. Since associates of ICICI Securities are engaged in various financial service businesses, they might have financial interests or beneficial ownership in various companies including the subject company/companies mentioned in this report. It is confirmed that Kajal Gandhi, CA, Vasant Lohiya, CA and Vishal Narnolia, MBA, Research Analysts do not serve as an officer, director or employee of the companies mentioned in the report. ICICI Securities may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Neither the Research Analysts nor ICICI Securities have been engaged in market making activity for the companies mentioned in the report. We submit that no material disciplinary action has been taken on ICICI Securities by any Regulatory Authority impacting Equity Research Analysis activities. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ICICI Securities and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction. ICICI Securities Ltd Retail Equity Research Page 15