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July 12, 2017 Indian Markets CMP Nifty 9,786 Sensex 31,747 BSE Small Cap 15,806 Midcap 14,923 INR/USD 64.59 Developed/Emerging markets Dow Jones 21,409 S&P 500 2,426 Nasdaq 5,710 Nikkei 20,128 Hang Seng 26,040 Bovespa 63,832 DAX 12,437 FTSE 7,330 SGX Nifty 9,803 Top gainers Underlying Security Videocon Ind. Alembic Ph. IGL JSPL Hexaware Recent eco. data India CPI Canada Employ Change Canada Unemploy Rate UK Halifax HPI US Unemploy Rate FIIs & DIIs cash activity (Rs cr) FII Equity DII Equity FII Debt DII Debt CMP 30 538 1,118 139 252 Actual 2.2 45.3K 6.5 (0.1) 4.4 % chg 1d 0.2 0.1 (0.6) (0.8) (0.1) 0.0 (0.1) 0.3 (0.3) 0.6 1.3 (0.1) (0.5) 0.1 % chg 5.0 4.8 4.2 3.3 3.2 Cons. 2.6 11.4K 6.6 0.2 4.3 % chg 3m 6.3 7.1 6.4 4.0 0.1 4.0 3.5 6.2 8.5 7.1 (0.1) 2.3 (0.3) 6.2 % chg 6m 16.4 16.5 24.6 18.0 (5.5) Top losers Underlying security Shriram Trans. Indian Bank GPPL Idea Cellular Bank Of India Upcoming eco. data US CPI US Retail Sales Canada NHPI US Industrial Production UK Unemploy Rate Previous day 182 336 1,103 718 MTD (1,825) 4,788 874 19,244 7.6 6.9 13.3 5.2 14.1 (0.2) 8.0 0.5 16.3 CMP 1,014 296 146 84 144 Cons. 0.1 0.2 0.2 0.3 4.6 % chg ytd 19.5 19.2 31.2 24.0 5.2 8.3 8.3 17.4 5.3 18.4 6.0 8.3 2.6 19.8 % chg (3.9) (3.5) (3.4) (3.3) (3.2) Previous (0.1) (0.3) 0.8 0.0 4.6 YTD 21,092 24,933 94,860 209,483 Waiting Wednesday! Neither here, nor there Life was always a matter of waiting for the right moment to act. Paulo Coelho The market movement in recent times is defying most concerns about valuations or impact of geo-political events. The appetite for risk saw the BSE’s valuation of all listed companies cross a record high of Rs 130 lakh crore on Tuesday before profit booking pared some of the gains. US indices reacted to another Trump issue after reports stated that emails by President Donald Trump’s eldest son had cited Russian support for his father’s 2016 election campaign. Meanwhile, attention now will be on what Federal Reserve chief Janet Yellen says during the two days of semiannual testimony on Capitol Hill. The outlook is a flat opening with a positive bias for now. Asian markets are in wait and watch mode. Nifty intra-day movement Banknifty intra-day movement 9,840 23,800 9,800 23,660 23,730 9,820 23,590 9,780 9,760 9,740 09:15 11:20 Sectoral movement 13:25 5 15:30 % chg 1d 4 3 23,520 23,450 09:15 11:20 13:25 15:30 % chg 5d 2 1 0 (1) (2) IT Auto FMCG Energy Realty Media Pharma Fin Services Infra Bank Corporate Snippets & Economy Updates Corporate News BhartiAirtelconductingtrialsofVoLTEtechnologyinfivecircles TataSteelsignsdefinitiveagreementwithLibertyHouseGroup JetAirwayseyestoraisecapitalforexpansionplans Tata Power's Club Enerji helps save 23,31,824 units of energy in MumbaiinFY17 ONGC'soverseasarmtobidinLebanongasfieldauction IOC, LanzaTech to construct world's first refinery off gas‐to‐ bioethanolproductionfacilityinIndia TataSteelcommissionsfirst3MWsolarpowerplantatNoamundi EmamispendsRs.443cronadvertising,promotionsinFY17 Chandni Textiles to commence commercial production at newly expandedproject BrahmaputraInfrastructurebagsorderworthRs.116.6cr Economy News Governmentlikelytoimposecountervailingdutyof18.95%onsome steelproducts Results table Rsm IndusIndBank TheSouthIndianBank CCLProducts(India) Revenue 17,741 4,607 1,782 YoY% 30.8 23.3 2.9 PAT 8,366 1,015 206 YoY% 26.5 6.7 (16.6) Upcoming Events Jul12: Japan PPI, Australia Westpac Consumer Sentiment, Japan Tertiary Industry Activity, UK Average Earnings Index, UK UnemploymentRate,EurozoneIndustrialProduction,German 10‐y Bond Auction, Canada Overnight Rate, US Crude Oil Inventories,US10‐yBondAuction Jul13: NewZealandFPI,UKRICSHousePriceBalance,AustraliaMI Inflation Expectations, China Trade Balance, China USD‐ DenominatedTradeBalance,GermanFinalCPI,FrenchFinal CPI,CanadaNHPI,USPPI,USUnemploymentClaims,USCore PPI,USFederalBudgetBalance Jul14: NewZealandBusinessNZManufacturingIndex,JapanRevised IndustrialProduction,ItalianTradeBalance,EurozoneTrade Balance,USCPI,USCoreRetailSales,USCapacityUtilization Rate, US Industrial Production, US Prelim UoM Consumer Sentiment,USBusinessInventories Newssource:AceEquity RESULT UPDATE Q1 FY18 July 12, 2017 IndusInd Bank - BUY Strengtheningfranchise Loan growth on strong trajectory; mix to tilt towards consumer fin IndusIndBank’sloangrowthmoderatedabitto24%yoyonthebackof growth deceleration in both retail (~40% of loan book) and corporate (~60%)assetportfolios.Intheformer’scase,growthinthevehiclefinance piece (comprising ~60% excluding CE) remained sedate at 13% yoy weigheddownbyindustryadjustmentstowardstheimplementationofBS IV and GST. CV financing portfolio growth was healthy at 12.5% yoy, considering weak trend in industry volumes. Growth in car and constructionequipmentfinancingremainedstrongasthebankcontinues to gain market share. Other products in the consumer finance portfolio suchascreditcards,tractorloansandLAParegrowingatrobustpace. IndusInd’scorporatebookhasbeengrowingintherangeof25‐30%yoy forthepastseveralquartersmanifestingwalletsharegainsandimpressive customer addition underpinned by improving pricing competitiveness. More importantly, the rating profile of this portfolio has been gradually improving and nature of lending remains that of short‐term/working capital. The bank is well positioned to grow at 25‐30% pa given its impressiveproductandcapitalposition.Theportfoliomixwillstarttilting towardsconsumerfinanceasgrowthinvehiclefinanceproductsrecover. SA ratio jumps, boosting CASA; NIM was stable Notwithstandingasizeableexpansioninoveralldepositbase,theSAratio jumped 220bps qoq to 23.6% driven by intensifying traction in both granularandinstitutionalflow.Contrarily,CAgrowthremainsrelatively weak.OverallCASAratiostoodat38%,highernearly350bpsyoy.Gains from higher CASA, resilient consumer book yields and interest income recognitiononaparticularaccountwerelargelyutilizedforbuildinghigh‐ rated corporate loans. Thus, the NIM was flat at 4%. Fee income grew behind the balance sheet at 25% yoy; impacted by weakness in loan processingfees. CMP(Rs)1,560 12‐mtsTarget(Rs)1,820 Upside16.7% Stock data (As on July 11, 2017) Sector: Financials Stock performance 31,747 Sensex: IndusIndBank SENSEX 1572/1038 150 52Weekh/l(Rs): 93,437 125 Marketcap(Rsmn): ‐ Enterprisevalue(Rsmn): 100 6mAvgt/o(Rsmn): 1,414 75 FV(Rs): Jul‐16 Oct‐16 Feb‐17 Jun‐17 10 0.4 Divyield(%): Shareholding pattern (%) IIBIN Bloombergcode: 16.8 Promoter 62.4 532187 BSEcode: FII+DII 20.8 Others INDUSINDBK NSEcode: Figure 1: Result table Q1FY18 Q4FY17 %qoq Q1FY17 %yoy Y/e31Mar(Rsm) TotalOperatingIncome 41,355 38,300 8.0 32,917 25.6 InterestExpenses (23,615) (21,626) 9.2 (19,353) 22.0 NetInterestIncome 6.4 13,564 30.8 17,741 16,675 Otherincome 11,673 12,113 (3.6) 9,730 20.0 TotalIncome 29,413 28,788 2.2 23,294 26.3 Operatingexpenses (13,528) (13,065) 3.5 (10,956) 23.5 Provisions (3,100) (4,301) (27.9) (2,305) 34.5 12,786 11,421 11.9 10,033 27.4 PBT Tax (4,420) (3,905) 13.2 (3,419) 29.3 ReportedPAT 8,365 7,516 11.3 6,614 26.5 Source:Company,IIFLResearch Analyst:RajivMehta,FranklinMoraes IndusInd Bank (Q1 FY18) Figure 2: Business Mix Business(Rsmn) Advances ConsumerFinance %share CorporateBanking %share Deposits Current Savings TermDeposits Q1FY18 11,64,070 4,70,950 40.5 6,93,120 59.5 13,36,730 1,89,450 3,15,560 8,31,720 Q4FY17 11,30,805 4,55,285 40.3 6,75,520 59.7 12,65,722 1,96,090 2,70,370 7,99,262 %qoq 2.9 3.4 ‐ 2.6 ‐ 5.6 (3.4) 16.7 4.1 Q1FY17 9,36,780 3,85,910 41.2 5,50,870 58.8 10,17,680 1,59,520 1,90,910 6,67,250 %yoy 24.3 22.0 ‐ 25.8 ‐ 31.4 18.8 65.3 24.6 Source:Company,IIFLResearch Figure 3: Key Ratios KeyRatios NIM(%) YieldonAdvances(%) CostofDeposits(%) CASA(%) C/D(x) Non‐interestincome(%) Non‐intinc/Intexp(%) CosttoIncome(%) Prov/AvgAdv(%Ann) RoE(%) RoA(%) CAR(%) GrossNPA(%) NetNPA(%) Q1FY18 Q4FY17 4.0 4.0 11.5 11.4 6.2 6.1 37.8 36.0 0.9 0.9 39.7 42.1 49.4 56.0 46.0 45.4 1.1 1.6 16.2 15.1 1.9 1.7 16.2 15.3 1.1 0.9 0.4 0.4 chgqoq Q1FY17 0.0 4.0 0.1 12.1 0.1 6.9 1.8 34.4 (0.0) 0.9 (2.4) 41.8 (6.6) 50.3 0.6 47.0 (0.5) 1.0 1.1 15.1 0.1 1.9 0.9 15.4 0.2 0.9 0.1 0.4 chgyoy 0.0 (0.5) (0.8) 3.4 (0.0) (2.1) (0.8) (1.0) 0.1 1.1 (0.1) 0.8 0.2 0.1 Stable asset quality; prudent utilization of provisioning release ThereportedincreaseingrossNPLratioto1.1%wasdrivenbyslippageof two restructured accounts (consortium exposures) and thus overall stressed portfolio was stable. Barring this, the annualized delinquency ratio in the corporate segment was within control at <1%. Slippages in consumerfinancesegmentwereslightlyhigherthantherangeseenover the past couple of years. CV, UV, small CV, Tractors and LAP products witnessedanincreaseindelinquencyrate.Whileprovisioning(~Rs1.2bn) on the Jaypee exposure got released on repayment by the acquirer, UltratechCement,alargepartofitwasutilizedtowardscreatingafloating provision and making accelerated provisions towards SRs and MFI portfolio.IndusIndBankhaslargelyprovidedfortheportfolioatriskinthe MFIsegment.Standardassetprovisioningwasalsoraisedto75bpsincase oftheTelecomexposure.Thus,annualizedcreditcostforthequarterstood above trend at 110bps. Overall PCR increased to 60% from 58% in the previousquarter. Robust execution can re-rate valuation further; maintain BUY WeexpectIndusIndbanktodeliverindustry‐best30%earningsCAGRover FY17‐19drivenbysustainedrobustbalancesheetgrowth,firmmargins, optimization of cost/income ratio and moderation in credit cost. Rich valuation at 3.4x FY19 P/ABV should not dissuade long term investors given IndusInd Bank’s impressive track‐record and strengthening franchisegrowthandprofitability.WeretainBUYratingonthebankand raise12‐monthpricetargettoRs1,820. Source:Company,IIFLResearch IndusInd Bank (Q1 FY18) Figure 4: Financial summary Y/e31Mar(Rsmn) Totaloperatingincome yoygrowth(%) Op.profit(pre‐prov.) Netprofit yoygrowth(%) EPS(Rs) BVPS(Rs) P/E(x) P/BV(x) ROE(%) ROA(%) Dividendyield(%) CAR(%) FY16 77,763 33.5 41,415 22,865 27.5 38.4 292.0 40.6 5.3 16.1 1.8 0.3 15.5 FY17 102,338 31.6 54,507 28,676 25.4 47.9 338.0 32.5 4.6 15.0 1.8 0.4 15.3 FY18E 127,977 25.1 68,667 36,760 28.2 61.5 386.7 25.4 4.0 16.6 1.8 0.5 13.6 FY19E 163,067 27.4 88,336 48,317 31.4 80.8 455.1 19.3 3.4 18.7 1.9 0.5 12.5 Technical Track Amid a largely chaotic Monday session, Nifty formed a fresh lifetime high of 9,782.However,theTuesdayfollow‐upupsidemoveprovedunconvincingeven astheindexfailedtoclingtothetopdespitescalinganewpeakof9,830.Selling pressure in Bank Nifty and Midcap noon trades erased a few early morning gains. Profitbooking,presenceofGannsupplypoint(i.e.4‐digitgannnumberof9851) and lucas series number (i.e. 9863) contributed to Tuesday’s decline. Candlesticktooktheshapeofasmallbodywithalonghighershadow,suggesting a pause after the recent surge. Moreover, sectoral trend turned cautious, as barringAutoandIT,allspacesendedinred. Company IndusBank IGL Vakrangee Infratel TataGlobal CMP 52‐wk Deviation (Rs) Low % 264 257 (2.6) 255 243 (4.9) 56 53 (5.1) 850 806 (5.2) 272 257 (5.3) Company VideoInd. RCOM DivisLab JubFood. JSPL CMP (Rs) 30 24 735 1,091 139 Company(mn) Suzlon RCOM AshokLeyland IdeaCellular Hindalco Day'sVol. 93 38 23 21 15 2‐weekAvg. Vol 48 30 17 9 9 10‐DMA 19 22 100 84 195 CMP(Rs) 19 24 105 84 201 %chg 2.7 (0.6) 1.5 (3.3) 2.5 Index Pivot Index Nifty Sensex NiftyBank NiftyIT Lastclose 9,786 31,747 23,585 10,430 Intra-day advance decline Proximity to 50-DMA 20‐ Deviation DMA % Company 23 30.4 UnitedSpirits 21 14.3 JSPL 658 11.7 Guj Fluoro. 983 11.0 Vakrangee 126 10.32 Ashok Ley % CMP Delivery (Rs) %chg 9.0 605 (0.1) 13.0 252 3.2 ‐ ‐ ‐ 15.0 1,091 (1.9) 16.0 1,710 0.1 Spurt in volumes *Basedondeviationfrom52‐weekhigh/low Proximity to 20-DMA CMP % (Rs) chg Company 1,680 0.2 JetAirways 5,446 (0.5) Hexaware 908 (0.5) ‐ 30 5.0 JubFood. 212 0.3 TataElxsi Laggards CMP 52‐wk Deviation (Rs) high % Company 1,561 1,571 (0.6) OIL 1,118 1,128 (0.9) CoalIndia 450 456 (1.4) IDBI 410 416 (1.5) Amara Raj. 170 173 (1.6) TataM DVR % Delivery 100.0 95.0 90.0 85.0 84.0 Company HDFCBank Glaxo.Cons. Cummins VideoconInd. PowerGrid Fund action AshishKacholiabought1.2mnsharesofBodalChematRs165. Leaders Low delivery stocks High delivery stocks Advance CMP 50‐ Deviation (Rs) DMA % 2,640 2,237 18.0 139 120 15.8 827 717 15.3 450 392 14.8 105 92 14.1 1,250 950 650 350 50 09:15 11:20 13:25 Pivot 9,798 31,783 23,628 10,458 Resistance 9,817 31,848 23,703 10,583 Sectoral trend Decline 1,550 *Basedondeviationfrommovingaverages Support 9,766 31,681 23,511 10,304 15:30 Energy Realty IT Metal Pharma Auto Infra Bank FMCG Media FinServices 2.6 2.4 2.3 2.1 1.8 1.8 1.7 0.9 0.8 0.8 0.5 (%) 0.0 1.0 2.0 3.0 *Calculationsbasedon10‐DMA Derivatives Diary Index snapshot Nifty BankNifty Futures 9,787 23,617 %Chg 0.1 (0.2) Spot 9,786 23,585 Basis 1.00 32.00 Next Month 9,822 23,675 OIinshs 272,501 64,984 Niftycontinuetoscalenewhighs,SGXNiftyindicatesmildpositive startforthedaytowards9805levels.Heavyweighttechstocksresult infocusfromtraders. Niftystrike9,600/9,700callssawmajorunwindingtotuneof2/5.1 lacs shares respectively, while put writers continues to build positionsonOTMoptionsof9,600strike. FII’s index futures long/short ratio at 2.62x vs 2.61x with massive long stock futures positions seen in last two days from FII’s after deadlineonP‐notesfromSEBI. ITstockssawrenewedbuyinginterestasweapproachtheresultfor TCSduetomorrow. Nifty open interest distribution (mn) 8.0 Call Put 7.0 6.0 PCROI 1.40 1.19 PCRVol 1.20 0.99 ATMIV's 9.4 14.5 Rollovers 9.6% 5.0% Maxcall build‐up 9,800 23,500 Maxput build‐up 9,600 23,000 Futures open interest gainers Scrip Ajantpharm Amarajabat Lichsgfin Torntpharm Colpal Indusindbk BPCL OI(lacs) 6 16 49 3 14 53 124 %OIChg 49.6 18.6 18.4 10.9 10.3 9.3 8.4 CMP(Rs) 1,506 855 729 1,330 1,084 1,555 678 %Chg (2.7) (1.8) (2.4) 2.5 (1.5) (0.1) 1.8 Action ShortBuildup ShortBuildup ShortBuildup LongBuildup ShortBuildup ShortBuildup LongBuildup CMP(Rs) 105 1,179 396 272 203 2,796 323 %Chg 1.0 (2.1) (2.7) 1.1 (4.7) 1.9 (0.6) Action ShortCovering LongUnwinding LongUnwinding ShortCovering LongUnwinding ShortCovering LongUnwinding Futures open interest losers Scrip Ashokley Concor Bhartiartl Hindzinc Ibrealest Bajaj‐Auto Marico OI(lacs) 547 8 307 140 324 15 38 %OIChg (10.4) (8.4) (7.0) (5.6) (5.3) (5.1) (5.0) Table 1: FIIsderivativeactivity 5.0 4.0 3.0 Tradingturnover 2.0 10400 10300 10200 10100 10000 9900 9800 9700 9600 9500 9400 9300 9200 9100 1.0 0.0 OI%Chg 1.7 (3.2) FIIs IndexFut* 1,531 StockFut* 16,611 IndexCalls* 24,152 IndexPuts* (14,083) DIIs 0 3,077 0 0 Prop HNIClients (133) (371) (19,640) (1,398) (19,317) (4,512) (13,982) 28,065 *Noofcontracts Securities in ban period:Hdil,Ibrealest,Jpassociat,Jsw,Ujjivan Commodities & Currencies Cues Commodities (US$terms) Gold(troyoz) Silver(troyoz) Copper(MT) Aluminium (MT) Zinc(MT) Lead(MT) Nickel(MT) WTICrude (bbl) Br.Crude(bbl) NG(mmBtu) Currencies USD/INR EUR/INR GBP/INR 12.2 JPY/INR 9.7 EUR/USD 14.6 GBP/USD (8.4) USD/JPY 1,900 0.0 2,825 2,311 9,175 0.2 0.2 0.5 45.7 1.5 (14.9) 48.1 3.00 1.3 (0.2) (15.3) (18.4) CommodityDynamics SPDRGoldETF(tonnes) iSharesSilverETF(mnoz) LMECuStocks('000MT) LMEAlStocks('000MT) LMEZnStocks('000MT) LMEPbStocks('000MT) LMENiStocks('000MT) USCrudestocks(mnbbl) USOilRigCount USD/CNY USD/Real USDIndex Latest 832 345 320 1,378 276 159 373 503 763 Weekago 846 340 276 1,402 287 163 371 509 756 Commodity v/s Currency Last %chg %chg price 1d ytd 64.60 0.0 5.2 73.60 0.0 (2.6) 83.40 0.0 0.1 0.56 0.0 2.9 1.15 1.28 113.70 0.0 0.0 0.0 9.1 4.1 2.9 6.79 0.0 2.2 3.25 95.70 0.0 0.0 0.0 (6.4) CRBIndex(LHS) 105 400 101 300 200 99 100 97 0 Jul‐17 Jun‐17 May‐17 Apr‐17 95 (100) Jun‐17 160 May‐17 170 Mar‐17 1yrago 981 343 223 2,344 440 185 378 496 341 Silver Crude May‐17 180 500 103 Apr‐17 190 Mar‐17 6mago 805 338 288 2,244 425 193 372 479 529 Gold Copper ('000lots) Mar‐17 DollarIndex(RHS) Feb‐17 200 1mago 867 340 277 1,456 323 177 377 510 733 Speculative positions on CME Jan‐17 Last %chg %chg Price 1d ytd 1,219 0.1 6.2 15.9 0.4 0.0 5,901 0.4 6.6 Feb‐17 FX Euro surged towards 1.5 level against the greenback, as market participants remain confident regarding prospects of tapering in ECB’s bond purchases and a rate hike in the second half of next year. Pound struggled despite a recovery in British retail sales during the second quarter.Itseemsdippingbusinessconfidencelevelsduetouncertainty over Brexit is taking a toll on the currency. Yen also remains on the defensiveduetodiminishingpopularityofJapanesePMAbe.Meanwhile, Looniecontinuestotradeonafirmnotegiventhehighexpectationsthat BankofCanadawillhikeinterestratesthisweek.Thiscomesafterthe CentralBank’sgovernorstatedrecentlythatthecountry’sinflationwill movehigherinfirsthalfofnextyearandthepolicynormalisationprocess shouldbeginmuchbeforeinflationarypressureexceedsitstarget. Jan‐17 Commodities Goldpricesextendedtherecovery,reboundingfromfourmonthlow,as political uncertainty aggravates in US. Meanwhile, investors await cues from Fed Chief’s testimony to Congress. However, there seem to be divergentviewsfromtheFedasfaraspolicynormalisationisconcerned. AlthoughYellenseemstobepersistingwithratehikes,someoftheFed membershaveexpressedcautionregardingslowwagegrowthandlow inflation. There has been a high degree of inconsistency between wage growth and unemployment rate, which has been very confounding. Experts reckon that if labour markets are really tight, then it should naturallytranslateintohigherwagegrowth.Intermsoflegislativenews, Trump administration will again put forward the healthcare bill in the Senatenextweek,however,itstillremainsunclearwhetherRepublicans havetherequiredmajoritytonavigateitthroughastubbornopposition. WTIOilfutureshoveredaroundUS$45/bblmark,stabilisingtoanextent aftersessionsofintensifiedselling.Meanwhile,GoldmanSachsreported thatWTIcouldsinkfurthertoUS$40/bbl,ifthereisnoseriousmitigation intheinventorylevels. Allocation & View – Assets & Sectors Asset Allocation Model Portolios Asset Allocations Equity Asset Class View Moderately Conservative Conservative (%) (%) Balanced (%) SAA TAA SAA 10 10 30 30 45 80 85 58 63 RealEstate 0 0 5 Alternatives 5 5 LiquidAssets 5 0 100 100 100 FixedIncome Total TAA SAA TAA Moderately Aggressive (%) Aggressive (%) SAA TAA SAA TAA 45 55 55 70 70 41 46 25 30 8 13 5 7 7 10 10 12 12 5 2 5 2 8 5 8 5 2 0 2 0 2 0 2 0 100 100 100 100 100 100 100 FixedIncome Equity RealEstate USDollar Gold MarketNeutral LiquidAssets Neutral Overweight Neutral Overweight Overweight Overweight Underweight Sector View for listed equities Sector Agriculture Automobile CapitalGoods Cement ConsumerDiscretionary Housingfinance MFI's PrivateBank PSUBank FMCG Infrastructure IT Metals&Mining E&P OilMarketing UtilitiesGas Pharma Telecom Utilities Source:IIFLResearch Strategic and Tactical Asset Allocations across Model Portfolios StrategicAssetAllocation(SAA)isthelongtermassetallocationstrategy for a client that is arrived at on the basis of risk assessment and investment objectives. There are five model portfolios that have asset allocationstosuitdifferentriskprofiles.Themodelportfolioshavebeen optimized using historical risk and returns across asset classes. Every month the IIFLW investment Committee formalizes monthly tactical viewsonthemarketsandtheirimpactonvariousassetclasses. TacticalviewsoneachassetarewithaoneyeartimehorizonandTactical Asset Allocation (TAA) is a +/‐ 5%‐10% change to a Client’s broader StrategicAssetAllocation. TacticalView SAA–StrategicAssetAllocation;TAA–TacticalAssetAllocation AssetClass Weight Overweight Neutral Underweight Underweight Overweight Overweight Underweight Neutral Neutral Underweight Overweight Underweight Neutral Underweight Overweight Overweight Underweight Underweight Neutral IIFL Wealth Research bags 2 Best Analyst Awards IIFLWealthResearchhasbaggedtwoprestigiousawardsattheZeeBusinessMarketExcellenceAwards2016. PrayeshJainwasconferredtheBestAnalystAwardforAutosectorandBhaveshGandhibaggedtheBestAnalystAwardforPharmasector. Besidesthetwinawards,IIFLWealthResearchwasalsonominatedinthecategoriesofOil/Gas,BankingandIndustrials. IIFLWealthResearch,asyouknow,hasalwaysprideditselfonitsuniquevaluepropositioninaswarmingmarketspaceofcut‐throatcompetition,amongotherthings, onourwealthofactionableideas,tailoredportfolioapproachandthoroughresearchinlinewithclientneedsandpriorities,distinctivepracticeoffollowingupwith CallSuccesspostrecommendationsandavastcoverageuniverseofasmanyas300companies(comprising70%ofIndia'sequitymcap). Inthepast,theresearchteamhaswonZeeBizAwardsunderdifferentcategories;Bloomberghasratedourresearchasthemostaccurate,whilewehavetwice beenwinnersofBusinessStandardSmartPortfolios,havingreceivedawardsatthehandsofluminariesincludingPresidentPranabMukherjee,PrimeMinister NarendraModiandMinisterofStatePiyushGoyal. Recommendation parameters for fundamental reports: Buy=>15%+ Accumulate=5%to15% Reduce=‐10%to5% Sell=>‐10% ABOUT IIFL Wealth Management Limited IIFLWealthManagementLimited(hereinafterreferredasIIFLW),aCompanyincorporatedunderCompaniesAct,1956,isregisteredwithSEBIasPortfolioManagerandasaStockBroker.IIFLWisalso registeredwithAMFIasadistributorofmutualfunds.IIFLWprovideswealthmanagementservicestovariousHNI/UltraHNIclientsandinteraliadistributesvarioussecuritiesandfinancialproducts, includingmutualfunds,alternativeinvestmentfunds,debenturesandstructuredproducts.IIFLWhasmadenecessaryapplicationforregisteringitselfasaDepositoryParticipant. Contact Details -CorporateOffice–IIFLCentre,KamalaCity,SenapatiBapatMarg,LowerParel,Mumbai–400013,Regd.Office–IIFLWHouse,SunInfotechPark,RoadNo.16V,PlotNo.B‐23,MIDC, ThaneIndustrialArea,WagleEstate,Thane–400604Tel:(91‐22)39585600.Fax:(91‐22)46464706E‐mail:[email protected]:www.iiflw.com. Registration Details 1]CINNo.:U74140MH2008PLC177884;2]SEBIPMSRegn.NoINP000002676:3]NationalStockExchangeofIndiaLtd.SEBIRegn.No.:INZ000011437,BombayStockExchangeLtd.SEBIRegn.No.: INZ0000114374]AMFIRegnNo.:59563 Terms&ConditionsandOtherDisclosureswithrespecttoResearchReport:‐ a) Thisresearchreport(“Report”)isforthepersonalinformationoftheauthorisedrecipient(s)andisnotforpublicdistributionandshouldnotbereproducedorredistributedtoanyotherpersonorinanyformwithout IIFLW’spriorpermission.TheinformationprovidedintheReportisfrompubliclyavailabledata,whichIIFLWbelieves,isreliable.WhilereasonableendeavorshavebeenmadetopresentreliabledataintheReportsofar asitrelatestocurrentandhistoricalinformation,butIIFLWdoesnotguaranteetheaccuracyorcompletenessofthedataintheReport.Accordingly,IIFLWoranyofitsconnectedpersonsincludingitsdirectorsorsubsidiaries orassociatesoremployeesshallnotbeinanywayresponsibleforanylossordamagethatmayarisetoanypersonfromanyinadvertenterrorintheinformationcontained,viewsandopinionsexpressedinthispublication; b) Pastperformanceshouldnotbetakenasanindicationorguaranteeoffutureperformance,andnorepresentationorwarranty,expressorimplied,ismaderegardingfutureperformance.Information,opinionsandestimates containedinthisreportreflectajudgmentofitsoriginaldateofpublicationbyIIFLWandaresubjecttochangewithoutnotice.Theprice,valueofandincomefromanyofthesecuritiesorfinancialinstrumentsmentioned inthisreportcanfallaswellasrise.Thevalueofsecuritiesandfinancialinstrumentsissubjecttoexchangeratefluctuationthatmayhaveapositiveoradverseeffectonthepriceorincomeofsuchsecuritiesorfinancial instruments. c) TheReportalsoincludesanalysisandviewsofourresearchteam.TheReportispurelyforinformationpurposesanddoesnotconstruetobeinvestmentrecommendation/adviceoranofferorsolicitationofanofferto buy/sellanysecurities.TheopinionsexpressedintheReportareourcurrentopinionsasofthedateoftheReportandmaybesubjecttochangefromtimetotimewithoutnotice.IIFLWoranypersonsconnectedwithitdo notacceptanyliabilityarisingfromtheuseofthisdocument. d) InvestorsshouldnotsolelyrelyontheinformationcontainedinthisReportandmustmakeinvestmentdecisionsbasedontheirowninvestmentobjectives,judgment,riskprofileandfinancialposition.Therecipientsof thisReportmaytakeprofessionaladvicebeforeactingonthisinformation. e) IIFLWhasotherbusinesssegments/divisionswithindependentresearchteamsseparatedby'chinesewalls'cateringtodifferentsetsofcustomershavingvaryingobjectives,riskprofiles,investmenthorizon,etc.and therefore,mayattimeshave,differentandcontraryviewsonstocks,sectorsandmarkets. f) Thisreportisnotdirectedorintendedfordistributionto,oruseby,anypersonorentitywhoisacitizenorresidentoforlocatedinanylocality,state,countryorotherjurisdiction,wheresuchdistribution,publication, availabilityorusewouldbecontrarytolocallaw,regulationorwhichwouldsubjectIIFLWanditsaffiliatestoanyregistrationorlicensingrequirementwithinsuchjurisdiction.Thesecuritiesdescribedhereinmayormay notbeeligibleforsaleinalljurisdictionsortocertaincategoryofinvestors.PersonsinwhosepossessionthisReportmaycomearerequiredtoinformthemselvesofandtoobservesuchrestrictions. g) AsIIFLWalongwithitssubsidiariesandassociates,areengagedinvariousfinancialservicesbusinessandsomighthavefinancial,businessorotherinterestsinotherentitiesincludingthesubjectcompany/iesmentioned inthisReport.However,IIFLWencouragesindependenceinpreparationofresearchreportandstrivestominimizeconflictinpreparationofresearchreport.IIFLWanditsassociatesdidnotreceiveanycompensationor otherbenefitsfromthesubjectcompany/iesmentionedintheReportorfromathirdpartyinconnectionwithpreparationoftheReport.Accordingly,IIFLWanditsassociatesdonothaveanymaterialconflictofinterestat thetimeofpublicationofthisReport. h) AsIIFLWanditsassociatesareengagedinvariousfinancialservicesbusiness,itmighthave:‐ (a)receivedanycompensation(exceptinconnectionwiththepreparationofthisReport)fromthesubjectcompanyinthepasttwelvemonths;(b)managedorco‐managedpublicofferingofsecuritiesforthesubject companyinthepasttwelvemonths;(c)receivedanycompensationforinvestmentbankingormerchantbankingorbrokerageservicesfromthesubjectcompanyinthepasttwelvemonths;(d)receivedanycompensation forproductsorservicesotherthaninvestmentbankingormerchantbankingorbrokerageservicesfromthesubjectcompanyinthepasttwelvemonths;(e)engagedinmarketmakingactivityforthesubjectcompany; IIFLWanditsassociatescollectivelydonotown(intheirproprietaryposition)1%ormoreoftheequitysecuritiesofthesubjectcompany/iesmentionedinthereportasofthelastdayofthemonthprecedingthepublication oftheresearchreportanddoesnothavematerialconflictofinterestattimeofpublicationoftheresearchreport; i) TheResearchAnalyst/sengagedinpreparationofthisReportorhis/herdependentrelative; (a)doesnothaveanyfinancialinterestsinthesubjectcompany/iesmentionedinthisreport;(b)doesnotown1%ormoreoftheequitysecuritiesofthesubjectcompanymentionedinthereportasofthelastdayofthe monthprecedingthepublicationoftheresearchreport;(c)doesnothaveanyothermaterialconflictofinterestatthetimeofpublicationoftheresearchreport. j) TheResearchAnalyst/sengagedinpreparationofthisReport:‐ (a)hasnotreceivedanycompensationfromthesubjectcompanyinthepasttwelvemonths;(b)hasnotmanagedorco‐managedpublicofferingofsecuritiesforthesubjectcompanyinthepasttwelvemonths;(c)hasnot receivedanycompensationforinvestmentbankingormerchantbankingorbrokerageservicesfromthesubjectcompanyinthepasttwelvemonths;(d)hasnotreceivedanycompensationforproductsorservicesother thaninvestmentbankingormerchantbankingorbrokerageservicesfromthesubjectcompanyinthepasttwelvemonths;(e)hasnotreceivedanycompensationorotherbenefitsfromthesubjectcompanyorthirdparty inconnectionwiththeresearchreport;(f)hasnotservedasanofficer,directororemployeeofthesubjectcompany;(g)isnotengagedinmarketmakingactivityforthesubjectcompany. WesubmitthatnomaterialdisciplinaryactionhasbeentakenonIIFLWbyanyregulatoryauthorityimpactingEquityResearchAnalysis. Agraphofdailyclosingpricesofsecuritiesisavailableathttp://www.nseindia.com/ChartApp/install/charts/mainpage.jsp,www.bseindia.comandhttp://economictimes.indiatimes.com/markets/stocks/stock‐quotes.(Choose acompanyfromthelistonthebrowserandselectthe“threeyears”periodinthepricechart). ForResearchrelatedqueries,writeto:AmarAmbani,[email protected].