India Financials 11-9-13 Prabhudas

8/12/2019 India Financials 11-9-13 Prabhudas

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India Financials

Digging deep into US$50bn of Power/Large corporate debt

Adarsh Parasrampuria

[email protected]

+91-22-66322236

Pritesh Bumb

[email protected]

+91-22-66322232

Click to edit Master title styleLilladherPrabhudas September 2013

Prabhudas Lilladher Pvt. Ltd. and/or its associates (the 'Firm') does and/or seeks to do business with companies covered in its research reports. As a result investors should be aware that

the Firm may have a conflict of interest that could affect the objectivity of the report. Investors should consider this report as only a single factor in making their investment decision.Please refer to important disclosures and disclaimers at the end of the report.


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Lilladher

Prabhudas Contents

September 11, 2013 2

Page No.

Factoring large corporate risk into valuations

Stress test Adjusting historic book values 24

Stress test Adjusting for future stress 25

Stress test Impact Analysis 26

Appendix: Group Level Power exposures

Lanco / GVK 27

JPA/ GMR 28

R-Power/ Adani Power 29

Ibulls Power / Aircel 30

Jindal Stainless / Essar Steel 31

Page No.

Digging deep into $50bn of Power/Large corporate debt 3

Investment/Sector View 4Valuations and PT 5

We have covered US$50bn of large corporate/Power SPV 6

Quantifying Individual Exposures! 7

Involvement in the US$50bn assets and their ticket sizes 8

Asset Class Exposure of Banks/NBFCs

Power AssetsICICI/Axis/Large PSUs equally exposed 9

Gas PowerNBFCs/Foreign banks have 45% of exposure 12

Coal Power - Similar level of exposure but different risks 13

Coal PowerSlicing the pie into IPP/ High/Low risk assets 14

Large corporates (ex-Infra)PSU banks all the way! 15

Bank/NBFC level exposure

ICICI Concentrated exposures but manageable 16

Axis Exposure higher than ICICI but lower than PSUs 17

Retail/Regional banks Negligible exposure! 18

SBI GroupLarge book but safer names underwritten 19

Large PSUs PNB/Canara worse off than peers! 20

Smaller PSUs Lower exposure than larger peers 21

Infra NBFCs Not well placed; IDFC better of the lot 22


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Lilladher

Prabhudas Digging deep into $50bn of Power/Large corporate debt

A lot has been written about concentration of system credit to few large corporate/ Infra

cos. In this detailed report, we identify ~US$50bn of power SPVs and risky corporate

groups which isor could get stressedand dig a lot deeper into bank-wise exposure in

these potential stress assets. (All from Publicly available sources

The caveat here is thatthis is based on bank charges created and actual exposures may marginally differ).

ICICI/Axis Large exposures but better placed than PSUs: Exposure in these

~US$50bn assets is ~28% of Networth (NW) forICICI and ~35% for Axislower than PSU

banks (~40-60% of NW). Risky power exposure is marginally lower than PSUs at 20-

25% of NW but ex-Infra risky corporate exposure is significantly lower at


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Lilladher

Prabhudas Investment /Sector View

Factoring the impact in valuationsRisk-reward still better for ICICI/Axis v/s PSUs:We factor impact from large corporate/risky power SPV

exposures to our book stress test. Given larger book impact for PSUs (v/s ICICI/Axis) and large adjustments required to improve

NPA/restructured book provisions (negligible in case of ICICI/Axis), adjusted valuations indicate a better risk-reward for ICICI/Axis v/s PSU

banks though recent upmove could restrict near term upside.

Key Stock Calls:

Beta private banks Meaningful exposure to risky large corporate names but risk in Axis exposure not as high as perceived:

ICICI/Axissexposure to these assets is quite meaningful at ~25-35% of NW but adjusted book indicate that valuations is factoring some

pain from these exposures. Share of high risk power book is lower for ICICI/Axis v/s PSU banks and between them risk profile of ICICIs

seems better. Yes bank will face liability challenges but our analysis indicates negligible exposure to these risky large corporates.

PSU banks - Most exposed to large corporate risk as well Valuations may be undemanding but there are many headwinds: Large

PSU banksexposure to these risky assets is highest, especially for banks like PNB/Canara. Of the cheaper ones, BOI/Unionsexposure

seems lower than peers. SBI/BOBare better only on coal power exposure as expected but large corporate book is as risky as peers

Valuations are undemanding but as we indicated in our earlier note that it will take longer for these banks to repair their B/S than the last

cycle (00-04) + capital/pensions worries also remain apart from the asset quality risks we discuss here.

Retail banksRisk-reward getting reasonable in some names now (HDFCB/ KMB/ IIB/ ING): As expected these banks have negligible

exposure to risky large corporatesOf the defensive names, we see risk-reward most attractive for HDFCB and ING (upgrade to BUY).

Regional banks Scope for some outperformance here: Most regional banks have limited exposure to these assets despite having a

meaningful Infra book, providing some comfort. We believe risk-reward has got very attractive for Federal bank (attractive vals +

beneficiary of NRE deposits + low exposure in these names). J&K banksrecent outperformance (liability franchise) + higher exposure in

these names pushes it down in our preference order.

Retail NBFCs- Mixed Views: With tighter liquidity, we prefer NBFCs with some pricing power where MMFS is best placed but valuations

remain dear. SHTFs recent correction discounts asset quality/ liquidity risks adequately and we would use any fall to ACCUMULATE.

Tightening reversal will remain a key catalyst for HFCs- For LICHF, valuations do discount margin impact from the recent tightening which

will also impact HDFC if the current situation persists.

Infra NBFCsREC/PFC (Not rated) have high exposure to risky power names which needs to be evaluated accordingly by investors trying

to take a value call on these names. IDFCsexposure to gas remains high but ~Rs10bn of provision buffer + better underwriting on coal

provides us greater comfort here to take a value call.



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Lilladher

Prabhudas Valuations and PT

Top Buys : HDFC Bank (high opex + credit costs flexibility Most resilient in the slowdown); ICICI/ Axis (though recent

upmove restricts upside); ING Vysya (Risk-reward getting attractive now; Upgrade to BUY)

Top Avoids: PSU banks (higher leverage to the credit cycle + capital/pension issues) ; HDFC (Risk-reward unattractiveespecially considering risk to margins)

Change in Recos: Upgrade ING to BUY from ACCUMULATE; Prefer INGover J&K Bank now among regional banks


FY14 FY15 FY14 FY15 FY14 FY15

Axis Bank 998 8,656 BUY 1300 30% 1.27 1.12 8.1 6.8 16.7% 17.4%

HDFC Bank 638 28,189 BUY 725 14% 3.56 2.98 18.8 15.4 20.3% 20.8%

ICICI Bank 970 20,688 BUY 1150 19% 1.56 1.41 10.0 8.9 13.3% 13.8%

HDFC 809 23,253 Accumulate 800 -1% 3.43 2.93 14.8 12.2 21.3% 22.5%

IDFC 89 2,497 BUY 115 29% 0.90 0.82 6.5 5.8 14.4% 14.4%

Kotak Bank 708 10,058 Reduce 700 -1% 2.83 2.52 21.2 17.7 14.7% 15.0%

IndusInd 410 3,970 BUY 460 12% 2.48 2.13 15.6 13.0 17.2% 17.9%

Yes 307 2,043 BUY 360 17% 1.58 1.32 7.6 6.5 22.6% 22.2%

PNB 464 3,030 Accumulate 500 8% 0.54 0.48 3.5 3.1 14.1% 14.6%

BOI 152 1,669 Accumulate 170 12% 0.43 0.38 3.1 2.5 12.4% 13.6%

BOB 482 3,750 Accumulate 550 14% 0.64 0.58 4.6 4.2 13.5% 13.3%

Union 109 1,205 Accumulate 125 14% 0.42 0.38 3.1 2.7 12.7% 13.6%

SBI 1,634 20,654 Accumulate 1700 4% 0.86 0.76 6.4 5.1 12.4% 13.8%LIC housing 185 1,730 BUY 210 13% 1.27 1.11 8.2 7.2 16.5% 16.5%

Shriram 568 2,381 Accumulate 625 10% 1.53 1.31 9.1 7.7 18.1% 18.2%

MMFS 268 2,821 BUY 300 12% 2.92 2.50 15.5 13.0 20.3% 20.8%

Federal 286 905 BUY 420 47% 0.71 0.64 6.1 5.1 12.1% 13.0%

ING Vysya 504 1,745 BUY 600 19% 1.33 1.20 12.2 9.7 13.3% 13.0%

J&K Bank 1,208 1,082 BUY 1400 16% 1.04 0.89 5.6 5.0 20.0% 19.4%

SIB 20 503 BUY 25 23% 0.89 0.77 5.7 4.7 15.6% 16.8%

Price Mcap ($ mn) Rating PT UpsideROEP/B P/E


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Lilladher

Prabhudas We have covered US$50bn of large corporate/Power SPV

Source: Corporate Affairs Ministry, PL Research

We also covered US$15bn of loans to risky corporates



We have covered ~63000 MW of power plants adding up to US$35bnGroup Asset Class Plant MW Fuel Debt

Calculated

Lanco Power Udupi Power 1200 Coal 60,009

Lanco Power Anapara 1200 Coal 38,768Lanco Power Kondapalli 1214 Gas 37,887

Lanco Power Amarkantak 1320 Coal 75,441

Lanco Power Vidarbha 1320 Coal 55,490

GVK Power Alkananda -Tehri 330 Hydro 33,530

GVK Power Goindwal Sahib- Punjab 540 Coal 24,405

GVK Power Gautami Power- AP 469 Gas 13,452

Tata Power Mundra UMPP 4000 Coal 139,883

Abhijit Power Chandwa 1080 Coal 34,370

Abhijit Power Banka - Bihar 1320 Coal 59,130

KSK Power Mahanadi - Chattisgarh 3600 Coal 121,411

Rpower Power Butibori 600 Coal 26,730

Rpower Power Sasan UMPP 3960 Coal 177,920

Rpower Power Samalkot -AP 2400 Gas 30,000

GMR Infra Power Rajamundry I/II 768 Gas 19,990

CESC Power Chandrapur - Maha 660 Coal 26,325Indiabulls Power Nashik - Phase I 1350 Coal 51,220

Indiabulls Power Amravati - Phase I 1350 Coal 52,060

Vizag Bottling Co Power Konaseema 445 Gas 16,273

Adani Power Mundra UMPP 4620 Coal 96,217

Adani Power Tiroda 3300 Coal 135,250

JSW Power Ratnagiri 1200 Coal 33,750

JPA Power Nigre 1320 Coal 56,700

JPA Power Bina 1320 Coal 42,410

JPA Power Karchana 1980 Coal 29,000

JPA Power Bara 1980 Coal 80,850

NTPC & GAIL Power Dabhol 1967 Gas 66,689

Torrent Power Power Sugen - Torrent 1,148 Gas 44,223

Torrent Power Power Dahej Power 1,200 Gas 39,430

SKS Ispat power Power Chattisgarh 1,200 Coal 35,000

Bajaj Hindustan Power Lalitpur Power 1,980 Coal 88,360

Coa l & Oi l Gr oup Power Coa sta l Ener gen 1 ,20 0 Coa l 31 ,8 27

Monnet I spa t Power Ma li br ahma ni TPP 52 5 Coa l 38 ,1 90

Ind Bharat Power Orissa 700 Coal 25,480

Ava ntha Power Power Seoni ,Madhya Pra des h 600 Coa l 21,800

Moser Baer Power Anuppur, MP 1,320 Coal 46,800

RKM power gen Power Uchpinda TPP 1,440 Coal 38,740

Visa Power Power Raigarh TPP(Visa) 600 Coal 19,640

DB Power Power Baradarha TPP 1,200 Coal 14,500

Eas t Coas t Ener gy Power Bha vanpadu TPP 1,320 Coa l 49,270

NCC / Ga ya thr i Power NCC Power Pr oj ec ts Ltd 1 ,32 0 C oa l 52 ,8 50

Others Power Kashipur CGT 225 Gas 8,334

Others Power Beta Infratech 225 Gas 8,640

Risky Corporates (Rs m)

Essar Steel 334,620

Aircel 175,850Jindal stainless 87,383

Suzlon 82,840

Electrosteel Steel 64,677

Soma group 56,610

Bombay Rayons 36,156

Winsome 38,450

Gitanjali 38,188

Gammon 26,770

Total Power 2,198,242

Power - Gas 284,918

Power - IPPs 495,704

Power - Coal - High Risk 1,068,621

Power - coal - Low Risk 844,704

Power -Coal 1,913,324

Risky corporates 941,543

Total Assets Analysed (Rs mn) 3,139,786

Total Assets Analysed ($ mn) 48,304

% of Loans

Total Power 3.6%

Power - Gas 0.5%

Power - Coal - High Risk 1.7%

Power - coal - Low Risk 1.4%

Power - Coal 3.1%

Risky corporates 1.5%

Power+ Risky Corporates 5.1%

In aggregate ,we cover US$50bn of assets, which is ~5% of system loans

which is or could face some stress though admittedly loss, given

restructuring/NPA declaration in many of these assets will be low


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Lilladher

Prabhudas Quantifying Individual Exposures!


Potentially problem assets (as a % of Networth)



Potentially problem assets (as a % of Loans)

0.0% 3.5% 7.0% 10.5% 14.0%

REC

PFC

IDFC

IDBI

PNB

Axis

LT In Fin

Canara

ICICI

Uco

SBI

J&K

BOB

IOB

OBC

Union

ALBK

BOI

Indian

Federal

Yes

Kotak

IIB

HDFCB

ING

KVB

SIB

Power - Gas Coal- High Risk Coal- Low Risk Risky corporates

0% 20% 40% 60% 80% 100%

REC

IDBI

PFC

United

PNB

Uco

Canara

IOB

SBI

Corp

UnionBOB

OBC

Andhra

BOI

J&K

Axis

Central

IDFC

ICICI

Indian

Federal

Yes

KVB

IIB

Kotak

HDFCB

SIB

ING

Power - G as Coal- H igh Risk Coal- L ow Risk Risky corporates


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Lilladher

Prabhudas Involvement in the US$50bn assets and their ticket sizes


Ticket Size of exposure in these assets (Rs m)



Involvement % (presence of respective Banks/NBFCs in no. of

projects/assets that we have analysed)

0.0% 20.0% 40.0% 60.0% 80.0%

PNB

SBI

BOB

IDBI

BOI

Union

Canara

Axis

OBC

Uco

Corp

ALBKIOB

Central

PFC

ICICI

Indian

REC

J&K

IDFC

Federal

Yes

HDFCB

KVB

IIB

SIB

Kotak

ING

LVB

0 4,000 8,000 12,000 16,000

SBI

PFC

REC

ICICI

IDBI

PNB

Canara

Axis

IDFC

BOB

HDFCB

IOBKotak

BOI

Uco

IIB

Central

Union

Corp

ALBK

OBC

J&K

Yes

Indian

Federal

ING

LVB

SIB

KVB


9/32

Lilladher

Prabhudas Power AssetsICICI/Axis/Large PSUs equally exposed



We have covered ~60000 MW of power plants, which we believe,

could face some delays/stress, including ~10000MW of gas-based

power plants and ~50000MW of coal power (~15000MW of IPPs).

This cumulates to ~Rs2.2trn, including Rs300bn of gas exposure andRs500bn of IPP exposure.

Axis/ICICI: These power assets constitute ~4% of their loans and

is almost 21-25% of their NW - % loan exposure is higher than

PSU banks but better capital levels limits the NW impact. ICICIs

share of gas and risky coal power exposure is lower than Axis.

Retail and Regional private banks: All regional/retail banks have

just 0.5% of loans in these power assets with the exception ofJ&K bank (~2% of loans) NW impact is


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Lilladher

Prabhudas Power AssetsProblem asset % of Loans/Networth


Power SPVs exposure as a % of Networth Infra SPVs and PNB/Canara

most exposed



Power SPVs exposure as a % of loansInfra NBFCs most exposed

0.0% 3.5% 7.0% 10.5% 14.0%

REC

PFC

IDFC

IDBI

PNB

Axis

LT In Fin

Canara

ICICI

UcoSBI

J&K

BOB

IOB

OBC

Union

ALBK

BOI

Indian

Federal

Yes

Kotak

IIB

HDFCB

ING

KVB

SIB

Power - G as Coal- H igh Risk Coal- Low Risk

0% 20% 40% 60% 80% 100%

REC

IDBI

PFC

United

PNB

Uco

Canara

IOB

SBI

Corp

UnionBOB

OBC

Andhra

BOI

J&K

Axis

Central

IDFC

ICICI

Indian

FederalYes

KVB

IIB

Kotak

HDFCB

SIB

ING

Power - G as Coal- H igh Risk Coal- Low Risk


11/32

Lilladher

Prabhudas Power Assets% Involvement and Ticket Sizes


Ticket size in power exposures of respective banks/NBFCs (Rs bn)

PFC/REC ticket size relatively large



Presence of respective banks/NBFCs in no. of power projects/assets that

we analysed (%) - PNB omnipresent; ICICI present only in select names

0.0% 15.0% 30.0% 45.0% 60.0% 75.0%

PNB

SBI

BOI

IDBI

BOB

Union

Uco

Axis

Canara

OBC

PFC

RECCorp

Indian

IOB

Central

ALBK

ICICI

IDFC

J&K

Federal

Yes

HDFCB

KVB

IIB

SIB

Kotak

ING

LVB

0 2,500 5,000 7,500 10,000 12,500

PFC

SBI

ICICI

REC

IDBI

IDFC

HDFCB

Axis

PNB

Kotak

BOICanara

BOB

IIB

Uco

IOB

Union

Central

ALBK

Corp

YesOBC

Indian

J&K

Federal

SIB

KVB


12/32

Lilladher

Prabhudas Gas PowerNBFCs/Foreign banks have 45% of exposure

Gas powerVery Risky: Gas exposure, we believe, is a very risky asset class, given that unlike coal, imported fuel is not a viable option

in most cases and hence, some of the plants will have to wait before domestic gas production improves.

Our study covers ~10000MW of gas plants with Rs300bn of exposure

IDBI/ IDFC most exposed: NBFCs, including Infra financing and IDBI, together constitute ~35% of the total debt and another 10% of debt

is held by foreign development banks, leading to just ~50% of the gas exposure being held by Indian banks -- IDBI and IDFC seems most

exposed with gas exposure in these assets being ~20% of their NW. Exposure of PFC/REC is fairly limited.

ICICI/Axis - Very limited gas exposure: Management has been maintaining for both banks of limited gas exposure and our data also

indicates that gas power exposure is just 2-3% of NW in case of ICICI/Axis (0.5% of loans).

PSU banks Very limited exposure: Gas exposure of PSU banks in most cases is


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Lilladher

Prabhudas Coal Power - Similar level of exposure but different risks

Our analysis covers ~53000MW of Coal plants with Rs1.9trn of exposure to Coal Assets, including 13500MW of IPPs with Rs450bn of

exposure. Infra NBFCs, including IDBI and Foreign banks, contribute again a significant ~40% of the total Rs1.9trn exposure, PSU banks

constitute ~45% and private banks the rest of the 10% exposure of these coal assets (largely ICICI/Axis).

For PFC/REC these coal assets represent 80-90% of their NW with significant exposure to coal power assets commissioned by Infraconglomerates/IPPs . IDFCscoal asset exposure is fairly limited to ~15% of their NW with limited IPP exposure (low relative to peers).

Large PSU banks - Similar exposure level - SBIscoal names less riskier; BOB/Canarasexposure low: These coal assets constitute ~25%

of NW of PSUs. SBIscoal power exposure at 26% of NW is similar to other PSUs but their exposure is largely to Adani/Tata/Torrent (~60%

of coal power) and exposure to IPPs/Infra conglomerates is low. BOB/Canaras coal power exposure is lower at


14/32

Lilladher

Prabhudas Coal Power Slicing the pie into IPP/ High/Low risk assets


Coal exposure as a % of Networth (IPPs included)


IPP exposure as a % of Networth (included in high risk)


Splitting 53000Mw of coal SPVsIncludes ~13500MW of IPPs; Including

IPPs, high risk power is 55% of the coal book


IPP (Higher risk)

26%

Other higher risk

29%

Low Risk

45%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

PFC

REC

United

IDBI

Uco

PNB

Corp

BOI

Union

IOB

Central

SBI

Axis

Indian

OBC

BOB

ICICI

Canara

J&K

IDFC

Yes

Andhra

Federal

KVB

0% 20% 40% 60% 80% 100%

REC

PFC

United

Uco

IDBI

PNB

Andhra

BOI

Corp

Union

SBI

IOB

Axis

Central

OBC

ICICI

Canara

Indian

IDFC

BOB

J&K

Yes

Federal

IIB

SIB

KVB

HDFCB

Kotak

ING

Coal-High R isk Coal-Low Risk


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Lilladher

Prabhudas Large corporates (ex-Infra)PSU banks all the way!

Our analysis covers ~10 risky corporates, cumulating to Rs1trn of exposure, with Rs450 being already recognized restructured accounts

and Rs520bn in 2-3 large accounts still remaining standard.

PSU banks all the way: In large risky corporates (ex Infra), share of PSU banks is high at ~75% (v/s 45% share in problem power assets),with top six PSU banks constituting ~50% of the exposure to these 10 risky corporates.

PNB/Canara worse off; BOI/Union better; SBI/BOB as risky as peers unlike their lower risk power exposure: PNB and Canara seem

omnipresent in most of the ex-Infra large corporate names. Union and BOI is surprisingly better off than peers as their ticket sizes is

smaller at Rs1-2bn in most of these cases v/s Rs7-10bn for peers. SBI/BOBsexposure at ~20% of NW is almost similar to peers with large

ticket sizes and presence across most names unlike their power books is as risky as peers.

ICICI/Axissexposure to these corporates is restricted to 1-2 bulky exposures (Essar steel) and is lower than PSUs at


16/32

Lilladher

Prabhudas ICICI Concentrated exposures but manageable


JPA + Essar2 single large group exposures (%

of networth)


Stress assets (% of Networth)


% of involvement and average Ticket Size


Group share in ICICIsRs150bn of stress assets


ICICIstotal debt to these assets is Rs150bn, constituting ~28% of their banking NW.

Gas risk low: Gas exposure is largely Dabhol-linked ex of which gas exposure is fairly

limited inline with management guidance of limited gas exposure.

Coal power risk restricted to largely JPA; IPP exposure also limited: Contrary to

expectations, ICICIscoal exposure to potentially stressed assets of Lanco/GVK/Abhijit

etc is low. JPA and Adani form ~65% of ICICIscoal exposure we analysed. Exposure to

IPPs is also limited (Rs25bn- 50% of this being lending to Essar Steel

Of ~55 risky assets we analysed, ICICI was present in just ~30% of assets but average

ticket size of Rs10bn is ~2x of Axis/PSU banks (SBI ticket size of Rs16bn) but a % of NWaverage ticket size is similar to peers

GVK /

Lanco /

Abhijit /

Rpower0.3%

Adani

10.3%

JPA

31.9%

IPPs

17.0%

Other

Power

15.7%

Essar Stee l

18.1%

Other Risky

corporates6.7%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

Lanco

GVK

Abhijit

Rpower

Indiabulls

Adani

JPA

IPPs

OtherPower

EssarSteel

Aircel

OtherCorp

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

PNB

Canara

SBI

BOB

Union

BOI

Axis

ICICI

No. of

risky

asset

present

in

Involvement

rate (%)

Avg.

ticket

size

(Rs m)

Ticket Size

% of

Networth

PNB 41 75.9% 5,620 1.80%

SBI 33 61.1% 15,146 1.53%

BOB 29 53.7% 4,538 1.47%

BOI 27 50.0% 3,233 1.42%

Union 26 48.1% 2,683 1.70%

Canara 24 44.4% 5,340 2.34%

Axis 23 42.6% 5,174 1.56%

ICICI 16 29.6% 9,517 1.75%


17/32

Lilladher

Prabhudas AxisExposure higher than ICICI but lower than PSUs


Present in all groups except JPA (power assets)

Concentration lower than ICICI


Problem assets (% of NW)




Group share in AxissRs120bn of stress assets


Axis bankstotal debt to these assets is Rs120bn constituting ~35% of their NW

Gas risk low: Axis has a small ticket involvement in few gas projects and exposure as a

% of NW at 2.7% is low in line with management guidance on gas assets.

Coal power risk Higher exposure to Infra conglomerates; Low IPP risk: Axis is

present in ~40% of the coal assets we analysed (higher than ICICI at ~30%) but Axis

coal power risk is spread across all Infra groups ex-JPA; however, IPP exposure is low. As

a % of NW, coal exposure is just marginally higher than ICICI in these projects.

Risky corporates: Exposure to analysed companies (ex Infra) is 12% of NW (7% ICICI)

but lower than PSUs at 20-25%.

Of 55 risky assets we analysed, Axis is present in just ~40% of assets and average ticket

size of Rs5bn is ~1.6% of their NW which is lower than peer group.

Lanco

9%

GVK5%

Abhijit

10%

Rpower

13%

Indiabulls

4%Adani

6%IPPs

17%

Other

Power

4%

Essar Stee l

21%

Other Corp

11%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Lanco

GVK

Abhijit

Rpower

Indiabulls

Adani

JPA

IPPs

OtherPower

EssarSteel

OtherCorp 0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

PNB

Canara

SBI

BOB

Union

BOI

Axis

ICICI

No. of

risky

asset

present

in

Involvement

rate (%)

Avg.

ticket

size

(Rs m)

Ticket Size

% of

Networth

PNB 41 75.9% 5,620 1.80%

SBI 33 61.1% 15,146 1.53%

BOB 29 53.7% 4,538 1.47%

BOI 27 50.0% 3,233 1.42%

Union 26 48.1% 2,683 1.70%

Canara 24 44.4% 5,340 2.34%

Axis 23 42.6% 5,174 1.56%

ICICI 16 29.6% 9,517 1.75%


18/32

Lilladher

Prabhudas Retail/Regional banksNegligible exposure!


Negligible exposure of regional/retail banks to these assets ex J&K bank


It is largely known that retail banks like HDFCB/ Kotak/ IIB have

limited Infra exposure which is also reflected in their almost

negligible exposure in these assets we have analyzed, it is

encouraging to see even regional banks have very limited exposureto these assets (despite having some Infra exposure).

Retail banks Almost no exposure: High quality retail banks

like HDFCB/ Kotak/IIB have just 1-2 exposures in the power

space and no exposure to the list of risky corporates we

analysed. These exposures is


19/32

Lilladher

Prabhudas SBI Group Large book but safer names underwritten


Low exposure to Infra conglomerates


Stress assets (% of NW)




Group share in SBIsRs650bn of these assets


SBIstotal debt to these assets is Rs650bn constituting ~50% of their NW

Gas risk low: SBIs gas exposure is largely Dabhol/Torrent linked, with limited

involvement in other plants in line with management guidance.

Coal exposure large but exposure to Infra conglomerates lower than peers: SBIs

exposure to coal power in these assets is similar to peers at 27% of NW but the

important point as management has been highlighting is that Infra conglomerate

exposure is lower than peers, with larger part of SBIs exposure being with

Adani/TATA/Torrent. Exposure of some SBI subsidiaries to IPPs is high.

Risky corporates Exposure large and names equally bad: SBIs exposure to risky

corporates (ex Infra) is similar to peers and data does not reflect any better under

writing as seen in the power book.

SBI being a bid daddy in Project finance is present in 60% of the cases. Ticket sizes is 2-

3x of peers but is in line with peers considering ticket size as a % of NW.

Lanco/GVK

0.2%Abhijit

2.9% Rpower

6.2%

Indiabulls

1.7%

Adani

10.0%

JPA

6.7%IPPs

16.6%

Other

Power

(Torrent/

Tata)

15.3%

Essar Stee l

11.7%

Aircel

7.9%

Other Corp

20.8%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

Lanco/GVK

Abhijit

Rpower

Indiabulls

Adani

JPA

IPPs

Torrent/Tata/etc

EssarSteel

Aircel

OtherCorp

(%o

fNetworth)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

PNB

Canara

SBI

BOB

Union

BOI

Axis

ICICI

(%o

fNetw

orth)

No. of

risky

asset

present

in

Involvement

rate (%)

Avg.

ticket

size

(Rs m)

Ticket Size

% of

Networth

PNB 41 75.9% 5,620 1.80%

SBI 33 61.1% 15,146 1.53%

BOB 29 53.7% 4,538 1.47%

BOI 27 50.0% 3,233 1.42%

Union 26 48.1% 2,683 1.70%

Canara 24 44.4% 5,340 2.34%

Axis 23 42.6% 5,174 1.56%

ICICI 16 29.6% 9,517 1.75%


20/32

Lilladher

Prabhudas Large PSUsPNB/Canara worse off than peers!


PSU banks: PNB most exposed followed by Canara; Surprisingly

BOI/Union look better placed than SBI/BOB


Large PSU banks, ex SBI, have large exposure to both potentially

stressed power and ex-Infra large corporate assets, with PNB being

the worst of the lot followed by Canara. BOI/Union are relatively

better placed v/s SBI/ BOB among the exposures we analysed.

PNB Omnipresent Worst of the lot: PNB is present in

almost 75% of the problem assets identified, especially on the

ex-Infra large corporate portfolio. Exposure to these sensitive

assets is ~70% of NW v/s 40-50% for other large PSU peers.

BOB Small ticket power exposure but ex-Infra exposures

remain chunky: Exposure to these assets is ~43% of BOBsNW.

But as management has been highlighting, their ticket size inpower book is lower than peers but this cannot be said of their

large corporate book where average ticket size is similar to

PNB/Canara.

BOI/ Union Similar risk in power book but lower risk in ex-

Infra corporate book: BOI/Unions exposure to these power

assets is similar to peers at ~30% of NW. But surprisingly, their

involvement in some of the risky large corporates is significantly

lower than peers (~10% of NW v/s 20-30% of NW for peers).

SBI BOB PNB BOI Canara Union ICICI/Axis

% of Exposure

Lanco 0.2% 8.4% 6.6% 21.5% 15.4% 5.2% 4.1%

GVK 0.0% 2.9% 2.2% 1.2% 0.0% 5.2% 2.4%

Abhijit 3.3% 0.0% 3.1% 3.6% 0.0% 3.4% 4.4%

Rpower 8.0% 2.3% 3.9% 0.0% 0.0% 13.2% 5.5%

Indiabul ls 1.9% 0.0% 2.2% 10.6% 1.8% 3.4% 1.5%

Adani 11.6% 5.2% 2.6% 9.0% 4.3% 6.5% 8.5%

JPA 2.1% 1.6% 4.5% 0.0% 2.5% 2.8% 17.8%

IPPs 14.4% 13.0% 15.5% 25.1% 8.3% 20.5% 17.6%

Other Power 17.4% 14.9% 9.2% 9.5% 8.4% 9.3% 10.5%

Essar Steel 10.6% 12.7% 7.6% 14.5% 17.8% 18.9% 19.3%

Aircel 8.4% 19.4% 13.1% 0.0% 18.2% 0.0% 0.0%

Other Ri sky corporates 22.0% 19.6% 29.7% 5.1% 23.3% 11.6% 8.4%

All Infra congomerates 12.8% 16.3% 26.3% 17.9% 16.6% 28.7%

% of Networth

Total Power 30.7% 21.1% 36.8% 31.2% 23.2% 31.3% 22.4%

Power - Gas 4.1% 6.0% 3.8% 1.7% 5.1% 2.0% 2.7%

Power IPPs 7.0% 5.4% 11.4% 9.2% 4.6% 8.7% 5.5%

Power - Coal - Hi gh Ri sk 13.5% 10.3% 22.0% 19.4% 12.2% 19.0% 10.1%

Power - coal - Low Risk 13.1% 4.7% 10.9% 10.1% 5.9% 10.2% 9.6%

Power - Coal 26.6% 15.1% 33.0% 29.5% 18.1% 29.2% 19.6%

Risky corporates 19.9% 21.5% 36.9% 7.2% 32.9% 12.9% 8.6%

Power+ Risky Corporates 50.5% 42.6% 73.7% 38.4% 56.1% 44.2% 31.0%

% of Networth

Lanco 0.1% 3.5% 4.9% 7.9% 8.5% 2 .2% 1.3%

GVK 0.0% 1.2% 1.6% 0.4% 0.0% 2.2% 0.8%

Abhijit 1.6% 0.0% 2.2% 1.3% 0.0% 1.4% 1.4%

Rpower 3.9% 1.0% 2.9% 0.0% 0.0% 5.6% 1.7%

Indiabul ls 0.9% 0.0% 1.6% 3.9% 1.0% 1.5% 0.5%

Adani 5.6% 2.2% 1.9% 3.3% 2.4% 2.8% 2.7%JPA 3.1% 1.6% 5.2% 2.2% 2.7% 3.7% 5.6%

IPPs 7.0% 5.4% 11.4% 9.2% 4.6% 8.7% 5.5%

Other Power 8.4% 6.2% 5.1% 2.9% 4.0% 3.2% 3.1%

Essar Steel 5.2% 5.3% 5.5% 5.3% 9.8% 8.0% 6.0%

Aircel 4.0% 8.1% 9.6% 0.0% 10.1% 0.0% 0.0%

Other Risky corporates 10.7% 8.2% 21.8% 1.9% 12.9% 4.9% 2.6%

Total 50.5% 42.6% 73.7% 38.4% 56.1% 44.2% 31.0%

No. of accounts involved 33.0 29.0 41.0 27.0 24.0 26.0

% of a cc ounts i nvol ved 61.1% 53.7% 75.9% 50.0% 44.4% 48.1%

Ticket Size (Rs mn) 15,146 4,538 5,620 3,233 5,340 2,683


21/32

Lilladher

Prabhudas Smaller PSUs Lower exposure than larger peers

Medium/Small PSU banks do not have the required project finance expertise and have largely participated in consortium lending but

analysis of these assets indicate that their exposure to power is similar to large peers but lower to riskier corporates (ex-Infra) Pls note

that we do not cover these names and our comments are restricted to the data below

Worse off among small/medium PSUs - United, Uco, IOB (their exposure level is higher than exposure of larger PSU banks)

Better off among small/medium PSUs Dena, Indian, Central (exposure lower than larger PSUs)



PSU banks: PNB most exposed followed by Canara; Surprisingly BOI/Union look better placed than SBI/BOB

Corp Andhra BOM ALBK Dena OBC Vijaya Indian IOB Syndicate Central Uco United PSB

Large

PSUs Mid PSUs

% of Networth

Total Power 30.5% 36.4% 6.5% 23.9% 11.7% 21.3% 30.1% 19.0% 26.6% 16.7% 22.7% 56.5% 68.6% 28.4% 31.6% 22.9%

Power - Gas 1.0% 6.7% 0.0% 1.9% 0.0% 1.9% 1.8% 1.5% 2.1% 0.8% 3.1% 4.1% 0.6% 3.8% 4.3% 1.8%

Power IPPs 9.4% 2.3% 4.6% 3.0% 0.0% 5.4% 8.3% 6.6% 8.3% 3.6% 7.9% 12.9% 14.8% 6.9% 8.0% 6.6%Power - Coal - Hi gh Ri sk 19.2% 26.5% 6.5% 8.6% 7.9% 14.5% 12.1% 14.1% 20.3% 6.6% 13.6% 35.5% 54.1% 21.1% 16.1% 15.0%

Power - coal - Low Risk 10.3% 3.2% 0.0% 13.3% 3.8% 4.8% 16.2% 3.4% 4.2% 9.3% 6.0% 16.9% 13.9% 3.6% 11.1% 6.1%

Power - Coal 29.5% 29.7% 6.5% 22.0% 11.7% 19.3% 28.3% 17.5% 24.5% 15.9% 19.6% 52.4% 67.9% 24.6% 27.2% 21.2%

Risky corporates 15.1% 3.8% 11.2% 14.8% 5.7% 19.1% 6.6% 1.8% 25.1% 18.1% 12.0% 15.2% 15.3% 2.7% 23.7% 12.2%

Power+ Risky Corporates 45.5% 40.2% 17.8% 38.7% 17.4% 40.3% 36.7% 20.8% 51.7% 34.8% 34.7% 71.7% 83.9% 31.2% 55.3% 35.1%

% of Networth

Lanco 4.0% 10.4% 0.0% 8.2% 5.8% 3.1% 7.6% 3.5% 7.4% 1.9% 3.7% 6.6% 4.7% 5.9% 3.3% 3.4%

GVK 1.4% 1.5% 0.0% 0.0% 2.0% 1.2% 1.9% 2.8% 0.2% 0.0% 1.5% 3.1% 6.4% 4.1% 0.6% 1.1%

Abhijit 0.0% 1.5% 0.0% 0.0% 0.0% 0.8% 0.0% 0.5% 0.0% 0.0% 0.0% 2.7% 0.0% 0.0% 1.4% 0.4%

Rpower 2.6% 2.4% 0.0% 0.9% 1.9% 0.0% 0.0% 0.0% 0.0% 1.0% 0.0% 1.0% 9.0% 0.0% 2.9% 0.8%

Indiabulls 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.7% 1.7% 2.5% 7.5% 0.0% 1.3% 0.7%

Adani 7.8% 3.5% 0.0% 5.8% 0.0% 2.5% 0.0% 0.0% 1.6% 4.7% 0.0% 5.5% 0.0% 4.1% 4.1% 2.3%

JPA 5.2% 3.6% 1.9% 1.1% 0.0% 3.7% 0 .0% 1.8% 5.2% 2.1% 7.1% 7.1% 13.3% 0.0% 3.3% 3.3%IPPs 9.4% 2.3% 4.6% 3.0% 0.0% 5.4% 8.3% 6.6% 8.3% 3.6% 7.9% 12.9% 14.8% 6.9% 8.0% 6.6%

Other Power 0.0% 11.2% 0.0% 4.8% 2.0% 4.6% 12.3% 3.7% 3.8% 0.8% 0.7% 15.1% 13.0% 7.3% 6.6% 4.3%

Essar Steel 12.5% 0.0% 0.0% 3.8% 0.0% 0.0% 0.0% 0.0% 9.1% 7.8% 4.1% 8.0% 0.0% 0.0% 6.4% 3.9%

Aircel 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 4.9% 5.2% 0.0% 0.0% 0.0% 0.0% 5.7% 1.2%

Other Risky corporates 2.5% 3.8% 11.2% 11.0% 5.7% 19.1% 6.6% 1.8% 11.1% 5.0% 7.9% 7.2% 15.3% 2.7% 11.6% 7.0%

Total 45.5% 40.2% 17.8% 38.7% 17.4% 40.3% 36.7% 20.8% 51.7% 34.8% 34.7% 71.7% 83.9% 31.2% 55.3% 35.1%

No. of accounts involved 18.0 18.0 7.0 17.0 8.0 22.0 12.0 16.0 17.0 13.0 17.0 22.0 20.0 10.0

% of accounts i nvol ved 33.3% 33.3% 13.0% 31.5% 14.8% 40.7% 22.2% 29.6% 31.5% 24.1% 31.5% 40.7% 37.0% 18.5%

Ticket Size (Rs mn) 2,419 1,883 1,338 2,387 1,067 2,217 1,621 1,409 3,745 2,560 2,742 2,978 2,206 1,133


22/32

Lilladher

Prabhudas Infra NBFCsNot well placed; IDFC better of the lot


Infra NBCs + IDBI worst placed with large exposure to these assets 90-

90% of NW for REC/PFC/IDBI; 35% of NW for IDFC


Infra NBFCs (including IDBI) is ~80-90% of their NW in these risky

assets, with IDBI/PFC/REC having exposure of ~80-90% of NW and

IDFC having exposure of ~35% of NW in these assets.

IDFCExtent of exposure manageable but high gas exposure

remains a risk Among Infra NBFCs, IDFC is better placed but

their exposure to gas power is ~20% of their NW, which we

believe, is a risk. Existing buffer of provisions (Rs10bn) is ~40%

of IDFCsgas exposure in these plants providing some respite.

PFC/REC - High exposure to Coal assets in risky namesCoal

power assets that we analysed is ~80-90% of their NW

PFC/RECs coal exposure of Rs175bn each in these assets iscomparable to SBI (Rs260bn) and also comparable is their ticket

size (Rs15-17bn) but coal names seem a lot more risky than

SBIsbook (Infra conglomerates is 30-40% of PFC/RECsNW v/s


23/32

Lilladher

Prabhudas Factoring large corporate risk into valuations


Private banks stack up better on adjusted basis


Our current stress Test: We have been running a stress test on book values for all corporate banks under our coverage with adjustment for

(1) 70% NPA coverage (2) 25% higher slippages from the restructured book and (3)Future stress based on Infra and large corporate exposure.

Substituting stress from these US$50bn exposure to Future stress in our stresstesting exercise : ~85% of the assets we have analyzed is

not NPA/restructured for banks currently and hence, indicates potential future stress from the large corporate book. Hence, we substitute our

future test based on sectoral exposures to a more certain stress test based on their relative exposures in these US$50bn assets.

Changes to our stress test based on stress from these US$50bn assets: Stress for ICICI and retail banks is similar to our earlier stress

assumptions but marginally higher for Axis bank. Among PSUs, PNB clearly stands out in terms of its high exposure to these assets and hence,

stress is higher than we initially estimated through sectoral data.

Axis/ ICICI better placed than PSUs: Adjusted for all the stress, we see ICICI/Axis better placed than PSU banks as their hit on book value is

~50-55% of NW (v/s 20-25% for ICICI/Axis) driven by ~20-25% hit due to 70% NPA coverage and higher restructuring provisions and ~25-30%

hit to NW from future stress derived from the US$50bn stress assets. Relative to its own trading history and negligible sensitivity, HDFCB alsooffers some value according to us among defensives.

-

0.50

1.00

1.50

2.00

ICICI Axis Yes SBI PNB BOB BOI Union

Normalised P/ B Adjus ted P/ B P/B af ter S tress (earlier) P/B after s tres s (Now)


24/32

Lilladher

Prabhudas Stress testAdjusting historic book values


ICICI Axis HDFCB Kotak Indusind Yes SBI PNB BOB BOI Union

Sep-14 Reported book 550 848 199 256 176 213 2,100 1,043 853 440 301

P/B on reported book 1.35 1.18 3.20 2.75 2.32 1.44 0.72 0.44 0.56 0.34 0.36

Impact from adjusting to 70% NPA coverage:Gross NPAs (4Q13) 96,078 23,934 23,346 7,580 4,578 943 799,843 134,658 79,826 87,653 63,138

Net NPAs (4Q13) 22,306 7,041 4,690 3,603 1,368 70 373,527 72,365 41,920 59,473 33,534

Coverage (%) 76.8% 70.6% 79.9% 52.5% 70.1% 92.6% 53.3% 46.3% 47.5% 32.1% 46.9%

Intended coverage (%) 70% 70% 70% 70% 70% 70% 70% 70% 70% 70% 70%

70% coverage impact -Per Share - - 2 203 95 50 57 25

% impact from 70% coverage adjustment 0.0% 0.0% 0.0% -0.7% 0.0% 0.0% -9.7% -9.1% -5.8% -13.0% -8.3%

Sep-14 Adjusted book (ex. Restructuring) 550 848 199 255 176 213 1,898 948 804 383 276

Sep-14 Price to adj. book 1.35 1.18 3.20 2.77 2.32 1.44 0.79 0.49 0.60 0.39 0.39

Impact from slippages on Restructured book

Restructured book - 4QFY13 69,490 47,010 5,281 576 1,597 1,844 560,443 321,434 226,174 191,750 116,260

AI - - - - - - 12,000 16,000 24,000 27,000 10,000

SEB's - - - - - - - 77,000 45,000 40,000 25,000

Restructured book (ex AI +SEBs) 69,490 47,010 5,281 576 1,597 1,844 548,443 228,434 157,174 124,750 81,260

Cumulative Slippages (Rs m) 11,238 3,335 4,470 464 197 421 141,479 16,160 26,115 19,030 28,050

Slippages (%) ex AI +SEBs 16.2% 7.1% 84.6% 80.6% 12.3% 22.8% 25.8% 7.1% 16.6% 15.3% 34.5%

Additional slippgaes (%) - Ex AI +SEBs 25.0% 25.0% 10.0% 10.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0% 25.0%

Additional slippgaes ex AI +SEB 17,373 11,753 528 58 399 461 137,111 57,109 39,293 31,188 20,315

NPV impact AI (% of exposure) 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%NPV impact SEBs (% of exposure) 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0% 10.0%

Impact from AI +SEB - - - - - 1,200 9,300 6,900 6,700 3,500

Impact from restructured book - Per Share 13 26 1 0 1 1 210 197 128 66 41

% impact from restructured book slippages 2.4% 3.1% 0.6% 0.0% 0.4% 0.6% 10.0% 18.9% 15.0% 14.9% 13.6%

Sep-14 Adjusted book (incl. restrcuturing) 537 822 198 254 176 212 1,688 751 676 317 235

Sep-14 Price to adj. book 1.39 1.21 3.22 2.77 2.33 1.45 0.89 0.62 0.71 0.48 0.46

Price 969 998 637 704 410 307 1,632 463 481 151 109


25/32

Lilladher

Prabhudas Stress testAdjusting for future stress


Old stress Case ICICI Axis HDFCB Kotak Indusind Yes SBI PNB BOB BOI Union

Stress sectors (ex Infra) 17.7% 13.4% 13.9% 16.5% 13.1% 19.7% 19.7% 18.9% 22.0% 18.7% 17.5%

Additional stress 5.0% 7.5% 3.0% 3.0% 3.0% 5.0% 7.5% 10.0% 8.0% 7.5% 7.5%

Non Infra ( % of total exposure) 0.88% 1.00% 0.42% 0.49% 0.39% 0.99% 1.48% 1.89% 1.76% 1.40% 1.32%

Infra Portfolio 8.6% 13.4% 2.1% 5.0% 2.4% 8.4% 11.2% 16.1% 13.3% 16.2% 13.1%SEB 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 2.4% 4.6% 3.3% 3.8% 4.0%

Private power 5.2% 6.8% 2.1% 3.1% 2.4% 5.1% 3.8% 6.5% 3.8% 7.2% 5.1%

Other Infra 3.4% 6.6% 0.0% 1.9% 0.0% 3.3% 5.0% 5.1% 6.3% 5.2% 3.9%

Additional stress - Infra

SEB 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Private power 7.5% 10.0% 5.0% 5.0% 5.0% 5.0% 7.5% 12.5% 10.0% 10.0% 10.0%

Other Infra 7.5% 10.0% 5.0% 5.0% 5.0% 7.5% 7.5% 12.5% 7.5% 7.5% 7.5%

Infra ( % of total exposure) 0.64% 1.34% 0.10% 0.25% 0.12% 0.50% 0.66% 1.44% 0.85% 1.11% 0.81%

Total stress (% of Exposure) 1.53% 2.35% 0.52% 0.74% 0.51% 1.49% 2.14% 3.33% 2.60% 2.51% 2.13%

Total stress (% of Loans) 4.62% 4.48% 0.67% 1.01% 1.09% 3.63% 2.99% 4.32% 3.22% 3.20% 2.60%

Exposure (Rs bn) 8671 3732 3112 777 970 1169 18901 3850 3930 3541 2470Write offs (Rs bn) 132.3 87.7 16.2 5.8 5.0 17.4 404.1 128.2 102.3 88.9 52.5

Sep-14 Equity 647 408 474 196 92 76 1,465 375 368 270 185

% of Sep-14 Equity 20.4% 21.5% 3.4% 2.9% 5.4% 22.8% 27.6% 34.2% 27.8% 32.9% 28.3%

New Stress case ICICI Axis HDFCB Kotak Indusind Yes SBI PNB BOB BOI Union

Power Gas 14,886 8,983 8,000 3,613 0 0 40,249 12,007 18,579 3,950 3,170

Coal IPPs 25,948 20,400 0 0 0 1,500 68,916 30,540 16,700 19,664 12,526

Coal - Other high risk 8,800 32,949 0 0 0 1,750 64,432 38,250 15,190 24,494 17,550

Power coal - Low Risk 64,980 18,745 1,750 0 2,860 0 129,615 34,180 14,640 22,850 16,140

Risky Corporates not restructured 27,500 25,220 2,800 0 0 0 91,000 47,330 41,320 12,090 12,640

Risky corporates restructured 10,150 12,705 0 0 0 2,040 105,604 68,123 25,180 4,254 7,740

Stress power + corporates 79,577 70,792 8,625 2,710 858 2,889 2 64 ,6 29 1 24 ,4 55 79,768 49,818 39,333Stress Other Infra 22,051 24,787 - 743 (0) 2,880 70,929 24,344 18,430 13,867 7,318

Total stress assets 101,628 95,579 8,625 3,452 858 5,769 3 35 ,5 57 1 48 ,7 98 98,198 63,685 46,651

% of Networth 15.7% 23.5% 1.8% 1.8% 0.9% 7.6% 22.9% 39.7% 26.7% 23.6% 25.2%

Adjusted P/B 1.64 1.59 3.28 2.82 2.36 1.57 1.16 1.02 0.97 0.62 0.62

v/s normalised vals -3.3% -6.7% -6.4% 4.3% -5.8% -12.9% 5.3% 20.2% 14.2% -4.2% -4.8%

Normalised P/B 1.70 1.70 3.50 2.70 2.50 1.80 1.10 0.85 0.85 0.65 0.65

Adjusted P/B 1.39 1.21 3.22 2.77 2.33 1.45 0.89 0.62 0.71 0.48 0.46

P/B after Stress (earlier) 1.74 1.55 3.33 2.85 2.47 1.88 1.23 0.94 0.99 0.71 0.65

P/B after stress (Now) 1.64 1.59 3.28 2.82 2.36 1.57 1.16 1.02 0.97 0.62 0.62

v/s Normalised vals -3.3% -6.7% -6.4% 4.3% -5.8% -12.9% 5.3% 20.2% 14.2% -4.2% -4.8%

P bh d


26/32

Lilladher

Prabhudas Stress testImpact Analysis


% of Loans ICICI Axis HDFCB Kotak Indusind Yes SBI PNB BOB BOI Union

Gross NPAs (FY13) 3.36% 1.22% 0.96% 1.33% 1.00% 0.20% 5.93% 4.54% 2.51% 3.15% 3.13%

Restructuring (net of slippages) 2.04% 2.23% 0.03% 0.02% 0.30% 0.30% 3.10% 10.29% 6.29% 6.21% 4.37%

Total stressed Assets 5.39% 3.45% 1.00% 1.34% 1.30% 0.49% 9.03% 14.84% 8.80% 9.37% 7.51%

NPA Provisions 2.58% 0.86% 0.77% 0.70% 0.70% 0.18% 3.16% 2.10% 1.19% 1.01% 1.47%

Floating Provisions 0.00% 0.19% 0.75% 0.00% 0.17% 0.17% 0.00% 0.00% 0.00% 0.00% 0.00%

Total Provis ions (Ex s tandard) 2.58% 1.05% 1.52% 0.70% 0.87% 0.35% 3.16% 2.10% 1.19% 1.01% 1.47%

Reported coverage 76.78% 70.58% 79.91% 52.46% 70.13% 92.59% 53.30% 46.26% 47.49% 32.15% 46.89%

Coverage (NPA + Restructuring ) 47.80% 30.53% 152.99% 51.70% 67.08% 70.72% 34.98% 14.16% 13.54% 10.82% 19.56%

Provsions factored in the stress test

Future stress 3.93% 3.81% 0.57% 0.86% 0.92% 3.09% 2.55% 3.68% 2.74% 2.72% 2.21%

NPA Provisions (for 70% coverage) 0.00% 0.00% 0.00% 0.20% 0.00% 0.00% 0.84% 0.92% 0.48% 1.01% 0.62%

Restructuring provisions 0.52% 0.51% 0.02% 0.01% 0.07% 0.08% 0.87% 1.90% 1.23% 1.16% 1.00%

Extra provisions 4.44% 4.32% 0.59% 1.06% 1.00% 3.17% 4.26% 6.50% 4.45% 4.89% 3.83%

Total Provisions (post stress test) 7.0% 5.4% 2.1% 1.8% 1.9% 3.5% 7.4% 8.6% 5.6% 5.9% 5.3%

Coverage on stress test (%) 75.3% 74.0% 134.9% 79.9% 84.1% 98.2% 64.1% 46.4% 48.9% 48.9% 54.5%

Impact on Equity from stress testing (old stress test)

70% NPA coverage 0.0% 0.0% 0.0% 0.7% 0.0% 0.0% 9.7% 9.1% 5.8% 13.0% 8.3%

Restructuring 2.4% 3.1% 0.6% 0.0% 0.4% 0.6% 10.0% 18.9% 15.0% 14.9% 13.6%

Future stress 20.4% 21.5% 3.4% 2.9% 5.4% 22.8% 27.6% 34.2% 27.8% 32.9% 28.3%

Total stress 22.8% 24.6% 4.0% 3.7% 5.8% 23.4% 47.2% 62.1% 48.6% 60.8% 50.3%

Impact on Equity from stress testing (New stress test)

70% NPA coverage 0.0% 0.0% 0.0% 0.7% 0.0% 0.0% 9.7% 9.1% 5.8% 13.0% 8.3%

Restructuring 2.4% 3.1% 0.6% 0.0% 0.4% 0.6% 10.0% 18.9% 15.0% 14.9% 13.6%

Future stress 15.7% 23.5% 1.8% 1.8% 0.9% 7.6% 22.9% 39.7% 26.7% 23.6% 25.2%

Total stress 18.1% 26.5% 2.4% 2.5% 1.4% 8.2% 42.6% 67.6% 47.5% 51.5% 47.1%

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Prabhudas Group Level exposures Lanco / GVK



GVK - Bank/ NBFC exposure ( % of total debt)

GVKBank/NBFC exposure (% of NW)


Lanco InfraBank/NBFC exposure (% of NW)


Lanco Infra - Bank/ NBFC exposure ( % of total debt)


Lanco Rs267bn in 5 power SPVs

Large exposures REC, PFC, Canara, BOI

Small/negligible exposures ICICI, SBI

GVK Rs267bn in 5 projects analyzed

Large exposures IDFC, IDBI, PNB

Small/negligible exposures SBI, ICICI, Canara

Large PSBs

28.4%

REC/PFC

26.5%

Other PSBs

19.9%

NBFCs/FIs

9.8%

IDFC

5.4%

IDBI

5.3%

Axis

4.2%

SBI & Asso

0.4%ICICI

0.0%

0%

5%

10%

15%

20%

25%

REC

PFC

IDFC

Andhra

CanBk

AllBk

BOI

Vijaya

IOB

IDBI

Uco

PSB

Dena

PNB

United

CorpBk

Central

Indian

BOB

Axis

OBC

UnBk

Other PSBs33%

Large PSBs

17%

REC/PFC

15%

IDBI

13%

IDFC

10%

Axis

10% Retail/Regional

2%

Others

1%

0%

1%

2%

3%

4%

5%

6%

7%

United

IDFC

PSB

IDBI

Karnataka

Uco

Indian

REC

UnBk

Dena

PFC

Vijaya

Axis

PNB

Andhra

Central

CorpBk

BOB

OBC

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Prabhudas Group Level exposures JPA / GMR



GMR- Bank/ NBFC exposure ( % of total debt)

GMRBank/NBFC exposure (% of NW)


JPABank/NBFC exposure (% of NW)


JPA - Bank/ NBFC exposure ( % of total debt)


JPARs210bn in 4 power SPVs

Large exposures ICICI, SBI, PNB, IDBI

Small/negligible exposures Axis, BOB

GMR Rs19bn in 1 Power SPV

Large exposures IDBI, PNB

Small/negligible exposures ICICI, SBI

ICICI

23%

Axis

0%

SBI & Asso20%

Large PSBs

18%

Other PSBs

23%IDBI

7%

IDFC

1%

Others7%

0%

2%

4%

6%

8%

10%

12%

14%

United

ICICI

Central

Uco

IDBI

Corp

PNB

IOB

Union

OBC

SBI

Canara

J&K

IDFC

BOI

Indian

BOB

ALBK

Axis

REC

PFC

Other PSBs

29%

IDBI

25%

Large PSBs

24%

Retail

9%

SBI & Asso

9%

IDFC

4%

0.0%0.5%1.0%1.5%2.0%2.5%3.0%

3.5%4.0%

J&K

PSB

SBP

IDBI

Andhra

AllBk

IOB

Syndicate

United

IDFC

PNB

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Prabhudas Group Level exposures R-Power / Adani Power



Adani Power- Bank/ NBFC exposure ( % of total debt)

Adani PowerBank/NBFC exposure (% of NW)


R PowerBank/NBFC exposure (% of NW)


R Power - Bank/ NBFC exposure ( % of total debt)


R-power Rs235bn in 3 Power SPVs

Large exposures Foreign banks, REC, PFC, Axis, SBI

Small/negligible exposures ICICI, IDFC, BOB

Adani PowerRs230bn in 2 Power SPVs

Large exposures SBI, REC, PFC, IDBI, ICICI

Small/negligible exposures Axis, IDFC

Foreign

34.2%

SBI & Asso

20.1%

REC/PFC

15.7%

Axis

7.6%Large PSBs

7.8% Other PSBs

9.3%

IDBI

2.5%

Retail

1.6%

Other NBFCS

1.3%

0%

2%

4%

6%

8%

10%

United

REC

PFC

UnBk

Axis

SBI

SIB

Yes

PNB

IDBI

CorpBk

Andhra

Dena

SBT

KVB

Uco

BOB

SBI & Asso

28.9%

Large PSBs

17.7%

REC/PFC

13.1%

Other PSBs

10.5%

Foreign

9.4% ICICI

7.1%IDBI

5.3% Axis

3.4%

Retail

2.5%

IDFC

2.3%

0%

2%

4%

6%8%

10%

CorpBk

REC

PFC

IDBI

AllBk

SBI

Uco

SBBJ

Syndicate

PSB

SBT

IIB

SBP

IDFC

Andhra

BOI

ICICI

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Prabhudas Group Level exposures Ibulls Power / Aircel



Aircel - Bank/ NBFC exposure ( % of total debt)

Aircel - Bank/NBFC exposure (% of NW)


Ibulls Power - Bank/NBFC exposure (% of NW)


Ibulls Power- Bank/ NBFC exposure (% of total debt)


Ibulls Power Rs103bn in 2 power SPVs (Phase-1)

Large exposures REC, PFC, BOI

Small/negligible exposures ICICI, IDFC, BOB

Aircel group Rs176bn Corporate Level

Large exposures Canara, PNB, J&K, BOB, SBI & Subs

Small/negligible exposures Axis, ICICI, IDFC

REC/PFC

54%

Large PSBs

16%

Other PSBs

14%

SBI & Asso

11%

Axis

4%

0%2%4%6%8%

10%12%

14%16%

REC

PFC

United

BOI

Syndicate

SBT

Uco

Central

SBBJ

PNB

UnBk

Axis

CanBk

SBI

Large PSBs

53%

SBI & Asso

34%

Other PSBs

7%

Retail

4%

Other NBFCS

2%

0%

2%

4%

6%

8%

10%

12%

CanBk

PNB

J&K

BOB

SBM

LTInFin

SBT

SBP

Syndicate

IOB

SBI

SBH

Federal

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Prabhudas Group Level exposures Jindal Stainless/ Essar Steel



Essar steel - Bank/ NBFC exposure ( % of total debt)

Essar Steel- Bank/NBFC exposure (% of NW)


Jindal Stainless - Bank/NBFC exposure (% of NW)


Jindal Stainless- Bank/ NBFC exposure ( % of total debt)


Jindal Stainless Rs87bn at Group Level

Large exposures SBI, PNB, Canara

Small/negligible exposures Private banks

Essar SteelRs335bn exposure at Group level

Large exposures SBI, IDBI, Canara, Axis, ICICI, SBI subs

Small/negligible exposures HDFCB, OBC

SBI & Asso

49%Large PSBs

46%

Axis

3%

ICICI

2%

0%

2%

4%

6%

8%10%

12%

SBP PNB Can Bk SBI BOB Axis

Large PSBs

26%

SBI & Asso

23%Other PSBs

14%

IDBI

12%

ICICI

8%

Axis

8%

Other NBFCS

6%

Retail

3%

0%

5%

10%

15%

20%

25%

IDBI

SBM

SBP

LVB

CorpBk

J&K

CanBk

SBH

IOB

UnBk

Uco

Syndicate

Axis

SREI

SBBJ

HDFCLtd

PNB

BOI

BOB

SBI

ICICI

Central

AllBk

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Lilladher

Prabhudas Disclaimer

S b 11 2013 32

BUY : Over 15% Outperformance to Sensex over 12-months Accumulate : Outperformance to Sensex over 12-months

Reduce : Underperformance to Sensex over 12-months Sell : Over 15% underperformance to Sensex over 12-months

Trading Buy : Over 10% absolute upside in 1-month Trading Sell : Over 10% absolute decline in 1-month

Not Rated (NR) : No specific call on the stock Under Review (UR) : Rating likely to change shortly

This document has been prepared by the Research Division of Prabhudas Lilladher Pvt. Ltd. Mumbai, India (PL) and is meant for use by the recipient only as information and is not for circulation. This document is

not to be reported or copied or made available to others without prior permission of PL. It should not be considered or taken as an offer to sell or a solicitation to buy or sell any security.

The information contained in this report has been obtained from sources that are considered to be reliable. However, PL has not independently verified the accuracy or completeness of the same. Neither PL nor any

of its affiliates, its directors or its employees accept any responsibility of whatsoever nature for the information, statements and opinion given, made available or expressed herein or for any omission therein.

Recipients of this report should be aware that past performance is not necessarily a guide to future performance and value of investments can go down as well. The suitability or otherwise of any investments will

depend upon the recipient's particular circumstances and, in case of doubt, advice should be sought from an independent expert/advisor.

Either PL or its affiliates or its directors or its employees or its representatives or its clients or their relatives may have position(s), make market, act as principal or engage in transactions of securities of companies

referred to in this report and they may have used the research material prior to publication.

We may from time to time solicit or perform investment banking or other services for any company mentioned in this document.

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Tel: (91 22) 6632 2222 Fax: (91 22) 6632 2209

PLs Recommendation Nomenclature

Rating Distribution of Research Coverage

27.8%

51.6%

17.5%

3.2%

0%

10%

20%

30%

40%

50%

60%

BUY Accumulate Reduce Sell

%o

fT

otalCoverage

Documents

India Financials 11-9-13 Prabhudas