J.P. Morgan - India PSU Banks

8/12/2019 J.P. Morgan - India PSU Banks

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Asia Pacific Equity Research10 May 2014

Equity Ratings and Price Targets

Mkt Cap Rating Price TargetCompany Ticker (Rs bn) Price (Rs) Cur Prev Cur PBank of Baroda BOB IN 341.35 830.30 OW n/c 850.00 Bank of India BOI IN 139.49 242.80 UW n/c 150.00 Punjab National Bank PNB IN 277.70 818.75 UW n/c 430.00 State Bank of India SBIN IN 1,458.34 2,173.25 N n/c 1,800.00 Source: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 09 May 14.

India PSU banksStart eyeing the exits

India

Financials

Seshadri K Sen, CFA AC

(91-22) 6157-3575

[email protected]

Bloomberg JPMA SEN <GO>

J.P. Morgan India Private Limited

Dhiren C Shah

(91-22) 6157 3576

[email protected]

J.P. Morgan India Private Limited

Josh Klaczek

(852) 2800-8534 [email protected]

J.P. Morgan Securities (Asia Pacific) Limite

See page 20 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware ththe firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a singfactor in making their investment decision.

The rally in PSU banks (42% since the February low) now looks overdoneto us. We think a marginal GDP recovery in FY15E is largely in the price – any further rally would push expectations to over-optimistic levels. Wethink the challenges to the economy should persist for another year at leastand valuations are close to discounting an unrealistic 6%+ GDP growth.Weak 4Q14 results is another near-term negative catalyst. Our least preferred stocks are BOI and PNB.

Sluggish economy. The turnaround in the economy is likely to be morelabored than the market believes. FY15E GDP growth of 5.5% is alreadyfactored in — a 15% rally in the sector will raise implied expectations to~5.8-6%. That looks overoptimistic to us — we believe asset quality islikely to remain challenged through FY15 irrespective of the electionoutcome.

Elevated rates. Interests are likely to stay elevated, given the pressureson inflation and the RBI’s articulation of its strategy. This should be alimiting factor to any hopes of a recovery and improvement in assetquality - any lasting and meaningful recovery is unlikely without at leasta 100bp correction in interest rates in our opinion. Moreover, thecontinued fiscal pressures should limit the 10-year IGB to 8.75%-9%, sowe expect no relief from there either.

Weak results. An immediate near-term risk is weak 4Q14 results for thePSU banks starting this week. Other PSUs who have reported have

largely shown weak asset quality - the few headline surprises have been belied by devils in the detail. Not only has asset quality surprisednegatively, outlook in terms of restructuring pipelines and expecteddelinquencies is quite poor.

What would it take? From 0.83x F15E PBV, we think the CNXPSBKwould respond to: a) a 100bp decline in interest rates (unlikely), or b) amaterial improvement in asset quality outlook. The market may haveover discounted the mild recovery in FY15. We support this argumentfrom two perspectives: a) a historical trading band with GDP and interestrates juxtaposed, b) comparing reported ROEs, adjusting for thedelinquency-provision lag vs. implied ROEs.

Figure 1: Smart rally in PSU banks

Source: Bloomberg.

0%10%20%30%40%50%60%70%

PNB BOI BOB SBIN CNXPSB

Pe rf si nc e 2 /2 0 C NXBAN K


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Asia Pacific Equity Research

10 May 2014Seshadri K Sen, CFA(91-22) [email protected]

A sustainable recovery in PSU bank valuations has to be supported by a strong

decline in incremental delinquencies - we think that will need the economy to

recover to 6.5-7%. This bears out with the analysis of historical trading bands above.

Figure 3: Stressed asset formation has remained elevated

Source: J.P. Morgan estimates, Company data. Note: Stressed asset=Fresh NPL+ 30% of restructured asset during the quarter

Figure 4:BOB-P/B 1yf vs. Adj ROE

Source: Bloomberg.

Figure 5: PNB-P/B 1yf vs. Adj ROE

Source: Bloomberg.

Figure 6: BOI-P/B 1yf vs. Adj ROE

Source: J.P. Morgan estimates, Bloomberg.

Figure 7: SBIN-P/B 1yf vs. Adj ROE

Source: J.P. Morgan estimates, Bloomberg.

-1.0%

1.0%

3.0%

5.0%

7.0%

9.0%

1Q12A 2Q12A 3Q12A 4Q12A 1Q13A 2Q13A 3Q13A 4Q13A 1Q14A 2Q14A 3Q14A

BOB BOI SBIN PNB

0%

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0.00.20.40.60.81.01.21.41.61.82.0

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4



Private banks are a better play

Figure 8: Current P/E valuation discount vs. average

Source: J.P. Morgan estimates, Bloomberg. Note: Avg valn since April 2005

Figure 9: Current P/B valuation discount vs. average

Source: J.P. Morgan estimates, Bloomberg. Note: Avg valn since April 2005

On P/E, the PSU banks trade much closer to the historical average than the private

banks, but not so on P/B. We prefer the P/E metric because PSU banks are unlikely

to re-attain historical ROE peaks, given that: a) new capital norms will cap leverage,

and b) structural ROAs are under pressure as both deposit and lending franchises are

weakening. On the other hand, private banks are attaining new ROA highs on

sustainable improvement in deposit franchises and, lately, cost efficiencies. Private

banks are probably a better way to play the rally from this point onwards.

Figure 10: PSU banks have reversed u/p since February: the trend could reverse again

Source: Bloomberg.

-60%-50%-40%-30%-20%-10%

0%10%20%

I D F C

Y e s

B O I

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CNXPSBK vs CNXBANK

CNXPSBK vs CNXBANK



5



4Q14 results: negative catalyst

The 4Q results from PSU banks have been uninspiring. There is no discernible trend

of an improvement in asset quality overall, and delinquencies have largely stayed

flat. The only positive data points have been from Canara and Allahabad, with

improved recoveries and restructuring. That has, however, been diluted by negative

commentary from the Canara Bank management on the restructuring pipeline and

that gave up its result-day gains over the next two sessions.

Table 1: Asset quality snapshot of PSU banks-4Q14 results

Rsbn Slippages Q414 Slippages Q314 Restructuring in Q4 Restructuring in Q3 Recovery Q4 Recovery Q3

OBC 12.1 10.4 10.4 13.7 4.1 3.5Canara Bank 21.4 21.0 13.1 34.0 14.5 4.1Syndicate Bank 12.0 6.9 10.9 5.1 6.1 6.1 Allahabad Bank 16.7 14.6 9.5 18.5 8.7 4.6

Union Bank 12.0 11.5 14.4 10.0 1.9 2.7Source: J.P. Morgan estimates, Company data.

Union Bank: The slippages during the quarter were concentrated in a few large

accounts. Out of the total slippages of Rs12bn in Q4, 9 a/c’s accounted for Rs10bn of

slippages. The largest slippage a/c was to the tune of Rs3bn in Q4. Current

restructuring pipeline stood at Rs17bn.The bank has sold Rs3.3bn to ARC as security

receipt, which were from fully written off a/c’s.

Canara Bank: More than 50% of the slippages were concentrated in two large a/c’s.

Out of the total slippages of Rs21bn in Q4, 2 a/c’s accounted for Rs12bn of

slippages. The current restructuring pipeline is higher at ~30bn (Rs13bn in Q4) in

around 12 a/c’s. Around 50% of the restructuring pipeline is likely to emanate from a

single a/c. The bank sold substantially higher amount to ARC worth Rs14bn.

Syndicate Bank: Management highlighted that overall NPLs are granular in nature

and ~60% of the NPLs are below Rs250mn. Pace of incremental slippages is likely

to reduce to around Rs3-4bn in the medium term (Q4 slippages of Rs12bn). 2 a/c’s

accounted for one-third of the slippages of Rs 12bn in Q4. There was no sale of

NPLs to ARC during the quarter.

OBC: The restructuring pipeline is likely to remain lower at Rs5-6bn compared to

Rs 10bn in Q4. Pace of incremental slippages is likely to reduce to around Rs7.5-8bn

in the medium term compared to Rs12bn in Q4.The bank sold NPLs worth Rs5.3bn

to ARC.



6



Consensus is turning cautious

Figure 11:Consensus EPS estimates-BOB (Mar-15)

Source: Bloomberg.

Figure 12:Consensus EPS estimates-BOI (Mar-15)

Source: Bloomberg.

Figure 13:Consensus EPS estimates-PNB (Mar-15)

Source: Bloomberg.

Figure 14:Consensus EPS estimates-SBIN (Mar-15)

Source: Bloomberg.

Figure 15: Consensus rating

Source: Bloomberg. Note: the lines relating to the banks are the Best Analyst ratings of Bloomberg. The CNXPSBK line is the daily

chart.

115

116

117

118

119

120

121

122

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Consensus EPS-BOB 3/2015

53

54

55

56

57

58

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Consensus EPS-BOI 3/2015

130

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145

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Consensus EPS-PNB 3/2015

220225230235240245250255260265

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Consensus EPS-SBIN 3/2015

1900

2400

2900

3400

3900

4400

2.5

2.7

2.9

3.1

3.3

3.5

3.7

3.9

4.1

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SBIN IN Equity BOB IN Equity PNB IN EquityBOI IN Equity CNXPSBK (RHS)

Consensus ratings on the PSU

banks have begun to turn.

Though not always the best

predictor (the Street chased the

price during the July sell-off),

but it is an incremental data

point to illustrate the lack of

concurrent indicators to support

the valuations from these levels,

and the risk of over-optimism.



8



Bank of Baroda

Company Data52-week Range (Rs) 837.85-429.25Market Cap (Rs mn) 341,353Market Cap ($ mn) 5,684Shares O/S (mn) 411Fiscal Year End Mar Price (Rs) 830.30Date Of Price 09 May 143M - Avg dai ly val (Rs mn) 1 ,503.013M - Avg daily val ($ mn) 25.03M - Avg daily vol (mn) 2.21BSE30 2,2344.04Exchange Rate 60.06

Price Target End Date 31-Mar-15

Bank of Baroda (Reuters: BOB.BO, Bloomberg: BOB IN)

Rs in mn, year-end Mar FY12A FY13A FY14E FY15E FY16EOperating Profit (Rs mn) 86,304 89,992 92,189 115,588 130,909Net Profit (Rs mn) 50,070 44,807 45,072 57,952 67,856Cash EPS (Rs) 121.79 106.05 106.67 137.16 160.60Fully Diluted EPS (Rs) 121.79 106.05 106.67 137.16 160.60DPS (Rs) 17.00 21.50 21.63 27.81 32.56EPS growth (%) 12.5% (12.9%) 0.6% 28.6% 17.1%ROE 21.2% 15.4% 13.8% 15.9% 16.4%P/E (x) 6.8 7.8 7.8 6.1 5.2BVPS (Rs) 668.34 730.51 811.88 916.50 1,039.01P/BV (x) 1.2 1.1 1.0 0.9 0.8Dividend Yield 2.0% 2.6% 2.6% 3.3% 3.9%Source: Company data, Bloomberg, J.P. Morgan estimates.

Investment Thesis, Valuation and Risks

Bank of Baroda (Overweight; Price Target: Rs850.00)

Investment Thesis

We are OW on the stock as:

1. We believe BOB’s asset quality will peak ahead of its peers as the macro

improves. BOB has traditionally been a conservative bank with a relativelylow risk profile and hence has a significant advantage over its peers, in our

view.

2. We believe the bank’s strong capital base is a significant advantage as

compared to its peers, as peers may have to forsake growth to preserve

capital.

3. We believe the current valuations are undemanding in the context of

improving return ratios and expect the stock to re-rate from here.

Valuation

Our Mar-15E PT for BOB of Rs 850/share is based on a two-stage Gordon growthmodel and implies 0.9x Mar 15 book. Our valuations factor in cost of equity at

16.1%, Normalised ROE of ~15% and terminal growth of 5%.

Risks to Rating and Price Target

Key risks: 1) Some of the large AAA exposures become delinquent 2) Sustained

monetary tightness hurting margins given the low CASA.



9



Bank of Baroda: Summary of FinancialsIncome Statement Growth Rates

Rs in millions, year end Mar FY12 FY13 FY14E FY15E FY16E FY12 FY13 FY14E FY15E FY16ENIM (as % of avg. assets) 2.6 2.3% 2.2% 2.4% 2.5% Loans 25.6% 14.4% 13.6% 15.5% 15.4%Earning assets/assets 97.5 97.6% 98.0% 98.0% 98.0% Deposits 26.0% 23.1% 11.2% 14.5% 14.6%Margins (as % of Avg. Assets) 2.6 2.3% 2.1% 2.4% 2.4% Assets 25.2% 22.1% 11.3% 14.3% 14.4%

Equity 39.0% 12.3% 11.1% 12.9% 13.4%Net Interest Income 103,170 113,153 121,944 153,043 179,276 RWA 20.9% 20.1% 13.0% 15.0% 15.0%

Total Non-Interest Income 34,223 36,306 41,421 46,951 52,734 Net Interest Income 17.2% 9.7% 7.8% 25.5% 17.1%Fee Income 19,378 20,974 23,763 27,371 31,532 Non-Interest Income 21.8% 6.1% 14.1% 13.4% 12.3%

of which Fee Grth 23.9% 8.2% 13.3% 15.2% 15.2%Total operating revenues 137,393 149,459 163,365 199,994 232,010 Revenues 18.3% 8.8% 9.3% 22.4% 16.0%

Costs 10.3% 16.4% 19.7% 18.6% 19.8%Operat ing costs (51,090) (59,467) (71,176) (84,406) (101,101) Pre-Prov is ion Profit s 23.6% 4.3% 2.4% 25.4% 13.3%

Loan Loss Provis ions 95.6% 60.0% (15.7%) 12.0% 5.8%Pre-Prov. Profits 86,304 8 9,992 92,189 115,588 130,909 Pre-Tax 6.6% (19.8%) 18.1% 33.7% 17.1%Provisions (26,046) (41,679) (35,136) (39,335) (41,625) Attributable Income 18.0% (10.5%) 0.6% 28.6% 17.1%Other Inc (treasury Income) - - - - - EPS 12.5% (12.9%) 0.6% 28.6% 17.1%Other Exp. - - - - - DPS 3.0% 26.5% 0.6% 28.6% 17.1%Exceptionals 0 0 0 0 0

Associate - - - - - Balance Sheet Gearing FY12 FY13 FY14E FY15E FY16EPre- ax 60,258 48,312 57,053 76,253 89,284 Loan/deposit 74.7% 69.3% 70.4% 70.7% 70.9%Tax (10,188) (3,505) (11,981) (18,301) (21,428) Investment/assets 3.1% 3.3% 3.4% 3.0% 2.7%Minorities 0 0 0 0 0 Loan/Assets 64.8% 62.6% 61.5% 62.4% 63.0%

Attributable Income 50,070 44,807 45,072 57,952 67,856 Customer deposits/liab. 91.7% 92.0% 91.9% 91.9% 92.0%LT debt/liabilities 3.2% 3.0% 3 .1% 3.3% 3.4%

Asset Quality/Capital FY12 FY13 FY14E FY15E FY16E

Per Share Data FY12 FY13 FY14E FY15E FY16E Loan loss reserves/loans (1.0%) (1.1%) (1.6%) (2.0%) (2.4%)

EPS 121.79 106.05 106.67 137.16 160.60 NPLs/loans 1.5% 2.0% 2.9% 3.6% 4.1%DPS 17.00 21.50 21.63 27.81 32.56 Specific loan loss reserves/NPLs 69.4% 53.9% 49.0% 51.7% 54.1%Payout 14.0 20.3% 20.3% 20.3% 20.3% Growth in NPLs 41.6% 78.8% 54.1% 36.8% 28.5%

Book value 668.34 730.51 811.88 916.50 1,039.01 Tier 1 Ratio 10.8% 10.1% 9.7% 9.8% 9.6%

Fully Diluted Shares 411 423 423 423 423 Total CAR 14.7% 13.3% 12.7% 12.5% 12.1%Key Balance sheet Rs in millions FY12 FY13 FY14E FY15E FY16E Du-Pont Analysis FY12 FY13 FY14E FY15E FY16E

Net Loans 2,873,773 3,281,858 3,708,499 4,264,774 4,904,490 NIM (as % of avg. assets) 2.6% 2.3% 2.2% 2 .4% 2 .5%LLR (29,211) (37,906) (61,491) (89,158) (118,864) Earning assets/assets 97.5% 97.6% 98.0% 98.0% 98.0%Gross Loans 2,902,984 3,319,763 3,769,991 4,353,932 5,023,354 Margins (as % of Avg. Assets) 2 .6% 2.3% 2.1% 2.4% 2.4%

NPLs 44,647 79,826 122,983 168,223 216,116 Non-Int. Rev./ Revenues 24.9% 24.3% 25.4% 23.5% 22.7%Investments 133,529 192,160 195,991 200,987 206,732 Non IR/Avg. Assets 0.9% 0.7% 0.7% 0.7% 0.7%Other earning assets 107,146 97,039 107,796 123,209 141,016 Revenue/Assets 3.4% 3.0% 2.8% 3.1% 3.1%

Avg. IEA 3,923,131 4,848,668 5,650,875 6,378,974 7,297,833 Cost/Income 37.2% 39.8% 43.6% 42.2% 43.6%Goodwill - - - - - Cost/Assets 1.3% 1.2% 1.2% 1.3% 1.4% Assets 4,473,215 5,460,312 6,075,061 6,946,300 7,949,619 Pre-Provision ROA 2.1% 1.8% 1.6% 1.8% 1.8%

LLP/Loans (1.0%) (1.3%) (1.0%) (1.0%) (0.9%)Deposits 3,848,711 4,738,833 5,267,529 6,029,670 6,912,622 Loan/Assets 64.8% 62.6% 61.5% 62.4% 63.0%Long- erm bond funding 126,473 155,490 185,865 222,404 259,029 Other Prov, Income/ Assets 0 .0% 0.0% 0.0% 0.0% 0.0%

Other Borrowings 0 0 0 0 0 Operating ROA 1.5% 1.0% 1.0% 1.2% 1.2% Avg. IBL 3,572,585 4,434,754 5,173,859 5,852,734 6,711,862 Pre-Tax ROA 1.5% 1.0% 1.0% 1.2% 1.2%

Avg. Assets 4,022,469 4,966,763 5,767,686 6,510,680 7,447,959 Tax rate 16.9% 7.3% 21.0% 24.0% 24.0%Common Equity 274,769 308,652 343,033 387,238 438,998 Minorities & Outs ide Distbn. 0.0% 0.0% 0.0% 0.0% 0.0%RWA 2,537,338 3,047,568 3,443,751 3,960,314 4,554,361 ROA 1.2% 0.9% 0.8% 0.9% 0.9% Avg. RWA 2,318,119 2,792,453 3,245,659 3,702,033 4,257,338 RORWA 2.2% 1.6% 1.4% 1.6% 1.6%

Equity/Assets 5.9% 5.9% 5.6% 5.6% 5.5%ROE 21.2% 15.4% 13.8% 15.9% 16.4%

Source: Company reports and J.P. Morgan estimates.



10



Bank of India

Company Data52-week Range (Rs) 341.45-126.50Market Cap (Rs mn) 139,493Market Cap ($ mn) 2,323Shares O/S (mn) 575Fiscal Year End Mar Price (Rs) 242.80Date Of Price 09 May 143M - Avg daily val (Rs mn) 988.663M - Avg daily val ($ mn) 16.53M - Avg daily vol (mn) 4.71BSE30 2,2344.04Exchange Rate 60.06

Price Target End Date 31-Mar-15

Bank of India (Reuters: BOI.BO, Bloomberg: BOI IN)

Rs in mn, year-end Mar FY12A FY13A FY14E FY15E FY16EOperating Profit (Rs mn) 62,844 70,114 83,209 94,648 103,687Net Profit (Rs mn) 26,775 27,493 27,833 34,258 40,854Cash EPS (Rs) 46.60 46.08 42.57 52.40 62.49Fully Diluted EPS (Rs) 39.48 38.59 36.45 47.05 57.90DPS (Rs) 7.00 10.00 6.39 7.86 9.37EPS growth (%) 2.5% (1.1%) (7.6%) 23.1% 19.3%ROE 12.7% 10.8% 9.8% 11.2% 12.4%P/E (x) 5.2 5.3 5.7 4.6 3.9BVPS (Rs) 343.35 381.07 398.16 441.36 492.88P/BV (x) 0.7 0.6 0.6 0.6 0.5Dividend Yield 2.9% 4.1% 2.6% 3.2% 3.9%Source: Company data, Bloomberg, J.P. Morgan estimates.


Bank of India (Underweight; Price Target: Rs150.00)

Investment Thesis

We are UW on the stock, as:1. We expect the significant valuation discount to its peers to persist, given its

weak fundamentals, high volatility in earnings, and large international book.

2. The bank has one of the lowest provision coverages among its peers. Theearnings impact of improved delinquency could thus be delayed and could

put further strain on the capital.3. The low capital level is likely to result in frequent recapitalization by GOI,

which could have a negative impact on the return ratios and thereforevaluations going forward. It could also affect growth.

Valuation

Our Mar-15 PT for BOI of Rs150 is based on a 2-stage Gordon growth model

implying 0.3x FY15E book. Our valuation factors in a cost of equity of 15.5%,

normalized ROE of 8%, and terminal growth of 5%.


1) If economic growth bounces back, asset quality could improve significantly,

resulting in lower credit costs than our expectations. 2) Greater policy support from

the government, especially in rural lending.



11



Bank of India: Summary of FinancialsIncome Statement Growth Rates

Rs in millions, year end Mar FY12 FY13 FY14E FY15E FY16E FY12 FY13 FY14E FY15E FY16ENIM (as % of avg. assets) 2.4 2.2% 2.2% 2.3% 2.4% Loans 16.3% 16.4% 16.3% 13.5% 12.8%Earning assets/assets 96.4 96.9% 97.2% 97.7% 98.2% Deposits 6.5% 20.0% 16.7% 7.5% 13.7%Margins (as % of Avg. Assets) 2.3 2.2% 2.2% 2.3% 2.3% Assets 9.6% 17.8% 16.2% 6.5% 13.1%

Equity 23.5% 15.3% 14.5% 10.9% 11.7%Net Interest Income 83,134 90,240 106,378 122,675 137,369 RWA 15.0% 19.2% 15.6% 12.8% 12.3%

Total Non-Interest Income 29,116 33,190 40,239 45,644 51,458 Net Interest Income 6.4% 8.5% 17.9% 15.3% 12.0%Fee Income 18,608 19,072 23,015 26,698 30,617 Non-Interest Income 25.5% 14.0% 21.2% 13.4% 12.7%

of which Fee Grth 10.5% 2.5% 20.7% 16.0% 14.7%Total operating revenues 112,250 123,430 146,617 168,318 188,827 Revenues 10.8% 10.0% 18.8% 14.8% 12.2%

Costs (2.5%) 7.9% 18.9% 16.2% 15.6%Operat ing costs (49,407) (53,315) (63,408) (73,670) (85,140) Pre-Prov is ion Profit s 24.1% 11.6% 18.7% 13.7% 9.6%

Loan Loss Prov is ions 65.0% 42.8% 7.9% 6.7% 0.5%Pre-Prov. Profits 62,844 70,114 83,209 94,648 103,687 Pre-Tax 2.3% (15.9%) 30.3% 19.7% 17.6%Provisions (31,164) (44,508) (48,008) (51,220) (51,479) Attributable Income 7.6% 2.7% 1 .2% 23.1% 19.3%Other Inc (treasury Income) - - - - - EPS 2.5% (1.1%) (7.6%) 23.1% 19.3%Other Exp. - - - - - DPS 0.0% 42.9% (36.1%) 23.1% 19.3%Exceptionals 4,096 4,471 4,000 3,500 3,000

Associate - - - - - Balance Sheet Gearing FY12 FY13 FY14E FY15E FY16EPre- ax 35,775 30,077 39,201 46,929 55,209 Loan/deposit 78.2% 75.8% 75.0% 78.8% 77.8%Tax (9,000) (2,584) (11,368) (12,671) (14,354) Investment/assets 4.0% 3.1% 2.7% 2.6% 2.5%Minorities 0 0 0 0 0 Loan/Assets 63.7% 65.1% 64.7% 67.0% 68.9%

Attributable Income 26,775 27,493 27,833 34,258 40,854 Customer deposits/liab. 87.5% 89.1% 89.4% 90.4% 90.8%LT debt/liabilities 7.8% 8.5% 8 .1% 7.9% 7.7%



EPS 46.60 46.08 42.57 52.40 62.49 NPLs/loans 2.3% 2.7% 3.0% 3.5% 4.1%DPS 7.00 10.00 6.39 7.86 9.37 Specific loan loss reserves/NPLs 47.7% 34.5% 43.1% 54.0% 58.3%Payout 15.0 21.7% 15.0% 15.0% 15.0% Growth in NPLs 22.5% 48.7% 16.7% 46.5% 21.9%

Book value 343.35 381.07 398.16 441.36 492.88 Tier 1 Ratio 8.6% 8.2% 8.1% 8.0% 7.9%

Fully Diluted Shares 575 597 654 654 654 Total CAR 12.0% 11.0% 10.9% 10.7% 10.6%Key Balance sheet Rs in millions FY12 FY13 FY14E FY15E FY16E Du-Pont Analysis FY12 FY13 FY14E FY15E FY16E

Net Loans 2,488,333 2,893,675 3,344,137 3,772,720 4,236,989 NIM (as % of avg. assets) 2.4% 2.2% 2.2% 2 .3% 2 .4%LLR (22,376) (28,180) (53,687) (82,407) (111,386) Earning assets/assets 96.4% 96.9% 97.2% 97.7% 98.2%Gross Loans 2,510,709 2,921,854 3,397,825 3,855,127 4,348,375 Margins (as % of Avg. Assets) 2 .3% 2.2% 2.2% 2.3% 2.3%

NPLs 58,940 87,653 102,262 149,831 182,600 Non-Int. Rev./ Revenues 25.9% 26.9% 27.4% 27.1% 27.3%Investments 129,483 127,451 136,073 144,276 153,163 Non IR/Avg. Assets 0.8% 0.8% 0.8% 0.8% 0.9%Other earning assets 114,657 109,158 129,245 81,740 94,549 Revenue/Assets 3.1% 3.0% 3.0% 3.1% 3.2%

Avg. IEA 3,532,884 4,045,575 4,743,486 5,291,588 5,843,756 Cost/Income 44.0% 43.2% 43.2% 43.8% 45.1%Goodwill - - - - - Cost/Assets 1.3% 1.3% 1.3% 1.4% 1.4% Assets 3,832,996 4,514,206 5,246,452 5,586,036 6,319,139 Pre-Provision ROA 1.7% 1.7% 1.7% 1.7% 1.7%

LLP/Loans (1.3%) (1.6%) (1.5%) (1.4%) (1.3%)Deposits 3,182,160 3,818,396 4,455,934 4,790,430 5,447,557 Loan/Assets 63.7% 65.1% 64.7% 67.0% 68.9%Long- erm bond funding 321,142 353,676 394,316 421,108 449,931 Other Prov, Income/ Assets 0 .1% 0.1% 0.1% 0.1% 0.1%

Other Borrowings 93,655 94,783 104,783 114,783 124,783 Operating ROA 0.9% 0 .6% 0.7% 0.8% 0.9% Avg. IBL 3,356,187 3,837,687 4,511,161 5,030,894 5,554,513 Pre-Tax ROA 1.0% 0.7% 0.8% 0.9% 0.9%

Avg. Assets 3,665,763 4,173,601 4,880,329 5,416,244 5,952,588 Tax rate 25.2% 8.6% 29.0% 27.0% 26.0%Common Equity 197,259 227,360 260,308 288,553 322,238 Minorities & Outs ide Distbn. 0.0% 0.0% 0.0% 0.0% 0.0%RWA 2,354,660 2,806,370 3,243,241 3,658,893 4,109,155 ROA 0.6% 0.6% 0.5% 0.6% 0.6% Avg. RWA 2,201,140 2,580,515 3,024,806 3,451,067 3,884,024 RORWA 1.0% 0.9% 0.8% 0.9% 1.0%

Equity/Assets 4.9% 5.1% 5.0% 5.1% 5.1%ROE 12.7% 10.8% 9.8% 11.2% 12.4%




12



Punjab National Bank

Company Data52-week Range (Rs) 852.65-400.20Market Cap (Rs mn) 277,703Market Cap ($ mn) 4,624Shares O/S (mn) 339Fiscal Year End Mar Price (Rs) 818.75Date Of Price 09 May 143M - Avg dai ly val (Rs mn) 1 ,042.373M - Avg daily val ($ mn) 17.43M - Avg daily vol (mn) 1.53BSE30 2,2344.04Exchange Rate 60.06

Price Target End Date 31-Mar-15Price Target (Rs) 430.00

Punjab National Bank (Reuters: PNBK.BO, Bloomberg: PNB IN)

Rs in mn, year-end Mar FY12A FY13A FY14E FY15E FY16EOperating Profit (Rs mn) 102,631 104,182 109,740 118,597 131,376Net Profit (Rs mn) 48,841 47,476 38,911 48,746 55,634Cash EPS (Rs) 144.00 134.31 110.08 137.91 157.39DPS (Rs) 22.00 27.00 30.00 33.00 36.30EPS growth (%) 2.9% (6.7%) (18.0%) 25.3% 14.1%ROE 20.0% 15.2% 11.1% 12.7% 13.9%P/E (x) 5.7 6.1 7.4 5.9 5.2BVPS (Rs) 777.39 884.03 959.01 1,058.31 1,058.31P/BV (x) 1.1 0.9 0.9 0.8 0.8Dividend Yield 2.7% 3.3% 3.7% 4.0% 4.4%Fully Diluted EPS (Rs) 136.81 124.24 102.05 128.15 146.66Source: Company data, Bloomberg, J.P. Morgan estimates.


Punjab National Bank (Underweight; Price Target: Rs430.00)

Investment Thesis

We are UW on the stock, as:1. We expect asset quality pressures to continue for the bank, given the weak

macro. PNB’s mid-corporate book remains quite vulnerable, and it’s probably the most tied to the overall economic cycle among the larger PSU banks.

2. The cheap valuations can be misleading, given the high dilution risk overthe next 2-3 years with high delinquencies and falling ROEs.

3. There is a risk of margin pressure for the bank. The bank is quite aggressivein the working capital space and that is margin destructive, in the high-rateenvironment.

Valuation

Our Mar-15 PT for PNB of Rs430 is based on a 2-stage Gordon growth model

implying 0.4x Mar15E book. Our valuation factors in a cost of equity of 16.4%,

normalized ROE of ~7%, and terminal growth of 5%.

Risks to Rating and Price Target1) A surprise recovery in the economy (faster growth). 2) Policy support which helps

PNB deal with its agri and SME NPLs.



13



Punjab National Bank: Summary of FinancialsIncome Statement Growth Rates

Rs in millions, year end Mar FY12 FY13 FY14E FY15E FY16E FY12 FY13 FY14E FY15E FY16ENIM (as % of avg. assets) 3.3% 3.3 3.3% 3.3% 3.3% Loans 21.9% 5.7 15.6% 14.6% 15.5%Earning assets/assets 97.4% 97.5 97.6% 97.6% 97.6% Deposits 21.3% 3.2 15.9% 12.3% 14.4%Margins (as % of Avg. Assets) 3.2% 3.2 3.2% 3.2% 3.2% Assets 21.2% 4.5 16.0% 13.3% 14.6%

Equity 31.6% 18.5 8.5% 10.4% 0.0%Net Interest Income 134,143 148,565 165,704 188,429 216,954 RWA 17.3% 11.1 19.7% 13.3% 14.6%

Total Non-Interest Income 38,515 37,267 40,249 45,078 51,389 Net Interest Income 13.6% 10.8 11.5% 13.7% 15.1%Fee Income 29,788 29,354 31,702 35,507 40,478 Non-Interest Income 16.3% (3.2%) 8.0% 12.0% 14.0%

of which Fee Grth 21.6% (1.5%) 8.0% 12.0% 14.0%Total operating revenues 172,658 185,832 205,953 233,508 268,343 Revenues 14.2% 7.6 10.8% 13.4% 14.9%

Costs 10.0% 16.6 17.8% 19.4% 19.2%Operat ing costs (70,028) (81,651) (96,213) (114,911) (136,967) Pre-Provision Profits 17.2% 1.5 5.3% 8.1% 10.8%

Loan Loss Provisions 43.5% 22.6 34.4% (10.2%) 6.2%Pre-Prov. Profits 102,631 104,182 109,740 118,597 131,376 Pre-Tax 7.2% (7.3%) (16.0%) 28.9% 14.1%Provisions (35,773) (43,856) (58,937) (52,950) (56,247) At tributable Income 10.2% (2.8%) (18.0%) 25.3% 14.1%Other Inc (treasury Income) - - - - - EPS 2.9% (6.7%) (18.0%) 25.3% 14.1%Other Exp. - - - - - DPS 0.0% 22.7 11.1% 10.0% 10.0%Exceptionals 3,511 4,892 4,000 5,000 5,500

Associate - - - - - Balance Sheet Gearing FY12 FY13 FY14E FY15E FY16EPre- ax 70,369 65,218 54,804 70,647 80,629 Loan/deposit 77.4% 78.8 78.2% 79.4% 79.8%Tax (21,528) (17,742) (15,893) (21,901) (24,995) Investment/assets 4.6% 4.8 4.4% 4.1% 3.9%Minorities 0 0 0 0 0 Loan/Assets 65.1% 65.6 65.8% 66.2% 66.8%

Attributable Income 48,841 47,476 38,911 48,746 55,634 Customer deposits/liab. 88.2% 87.8 87.3% 86.4% 85.6%LT debt/liabilities 8.7% 8.8 9.1% 9.8% 10.7%



EPS 144.00 134.31 110.08 137.91 157.39 NPLs/loans 2.4% 3.6 4.8% 5.6% 6.4%DPS 22.00 27.00 30.00 33.00 36.30 Specific loan loss reserves/NPLs 49.5% 46.4 46.9% 49.1% 50.6%Payout 15.3% 20.1 27.3% 23.9% 23.1% Growth in NPLs 99.1% 54.4 39.7% 32.9% 28.4%

Book value 777.39 884.03 959.01 1,058.31 1,058.31 Tier 1 Ratio 9.3% 9.8 9.1% 8.8% 7.7%

Fully Diluted Shares 339 353 353 353 353 Total CAR 12.6% 12.7 11.5% 10.9% 9.4%Key Balance sheet Rs in millions FY12 FY13 FY14E FY15E FY16E Du-Pont Analysis FY12 FY13 FY14E FY15E FY16E

Net Loans 2,937,748 3,087,252 3,550,340 4,047,387 4,654,496 NIM (as % of avg. assets) 3.3% 3.3 3.3% 3.3% 3 .3%LLR (41,841) (61,028) (90,326) (125,035) (163,711) Earning assets/assets 97.4% 97.5 97.6% 97.6% 97.6%Gross Loans 2,979,588 3,148,280 3,640,666 4,172,422 4,818,206 Margins (as % of Avg. Assets) 3 .2% 3.2 3.2% 3.2% 3.2%

NPLs 87,196 134,658 188,179 250,070 321,001 Non-Int. Rev./ Revenues 22.3% 20.1 19.5% 19.3% 19.2%Investments 226,467 220,861 235,815 251,865 271,468 Non IR/Avg. Assets 0.9% 0.8 0.8% 0.8% 0.8%Other earning assets 97,929 97,626 113,220 127,561 146,369 Revenue/Assets 4.1% 4.0 4.0% 4 .0% 4.0%

Avg. IEA 4,060,962 4,554,945 5,030,217 5,761,800 6,568,375 Cost/Income 40.6% 43.9 46.7% 49.2% 51.0%Goodwill - - - - - Cost/Assets 1.7% 1.7 1.9% 1.9% 2.0% Assets 4,567,445 4,774,482 5,537,470 6,271,773 7,187,958 Pre-Provision ROA 2.5% 2.2 2.1% 2.0% 2.0%

LLP/Loans (1.3%) (1.4%) (1.7%) (1.4%) (1.3%)Deposits 3,795,885 3,915,601 4,537,790 5,097,024 5,830,098 Loan/Assets 65.1% 65.6 65.8% 66.2% 66.8%Long- erm bond funding 372,643 396,209 486,513 604,422 758,597 Other Prov, Income/ Assets 0 .1% 0.1 0.1% 0.1% 0.1%

Other Borrowings 111,903 108,953 106,003 103,053 100,103 Operating ROA 1.6% 1.3 1.0% 1 .1% 1.1% Avg. IBL 3,806,706 4,240,169 4,668,056 5,362,874 6,145,071 Pre-Tax ROA 1.7% 1.4 1.1% 1.2% 1.2%

Avg. Assets 4,167,993 4,670,963 5,155,976 5,904,621 6,729,866 Tax rate 30.6% 27.2 29.0% 31.0% 31.0%Common Equity 263,675 312,481 338,984 374,083 374,083 Minorities & Outside Distbn. 0.0% 0.0 0.0% 0.0% 0.0%RWA 2,919,190 3,243,800 3,884,368 4,399,460 5,042,136 ROA 1.1% 0.9 0.7% 0.8% 0.8% Avg. RWA 2,703,395 3,081,495 3,564,084 4,141,914 4,720,798 RORWA 1.7% 1.4 1.0% 1.1% 1.1%

Equity/Assets 5.6% 6.2 6.3% 6.0% 5.6%ROE 20.0% 15.2 11.1% 12.7% 13.9%




14



State Bank of India

Company Data52-week Range (Rs) 2,472.00-

1,452.70Market Cap (Rs mn) 1,458,338Market Cap ($ mn) 24,281Shares O/S (mn) 671Fiscal Year End Mar Price (Rs) 2,173.25Date Of Price 09 May 143M - Avg dai ly val (Rs mn) 4 ,164.133M - Avg daily val ($ mn) 69.33M - Avg daily vol (mn) 2.34NIFTY 6659.85

Exchange Rate 60.06Price Target End Date 30-Sep-14Price Target (Rs) 1,800.00

State Bank of India (Reuters: SBI.BO, Bloomberg: SBIN IN)

Rs in mn, year-end Mar FY12A FY13A FY14E FY15E FY16EOperating Profit (Rs mn) 428,572 375,059 474,456 573,440 674,170Net Profit (Rs mn) 159,732 183,229 177,187 217,678 270,759Cash EPS (Rs) 238.04 267.87 259.03 318.23 395.83DPS (Rs) 35.00 35.00 45.24 54.28 65.14EPS growth (%) 35.2% 12.5% (3.3%) 22.9% 24.4%ROE 18.9% 12.9% 12.7% 14.2% 15.7%P/E (x) 9.1 8.1 8.4 6.8 5.5BVPS (Rs) 1,583.07 1,827.88 2,033.99 2,288.70 2,608.32P/BV (x) 1.4 1.2 1.1 0.9 0.8Dividend Yield 1.6% 1.6% 2.1% 2.5% 3.0%Fully Diluted EPS (Rs) 267.84 217.92 244.41 305.95 383.55Source: Company data, Bloomberg, J.P. Morgan estimates.


State Bank of India (Neutral; Price Target: Rs1,800.00)

Investment Thesis

We maintain our Neutral rating on the stock as:

Asset quality challenges should persist for some more time. Weexpect elevated levels of delinquencies in the medium term, bothfrom NPLs as well as from the restructured portfolio.

We expect margins to remain stable in the medium term despitehigher rates driven by strong liability franchisee and benefit of capraise.

SBI does have valuation support but the near-term trajectory looksquite challenged. The pressure on asset quality continues to concernus.

Valuation

Our Sept-14 PT for SBI is Rs 1800 based on a Gordon growth model with a

normalised ROE of ~15% and 2nd stage growth of ~12% and Rs274/share for the

insurance & subsidiaries business.


Key risks to our Neutral rating include: 1) Slower economic growth leading to higher

delinquencies, 2) Rising restructuring leading to higher NPAs, 3) Higher loan growth

can impact revenue positively.



15



State Bank of India: Summary of FinancialsIncome Statement Growth Rates

Rs in millions, year end Mar FY12 FY13 FY14E FY15E FY16E FY12 FY13 FY14E FY15E FY16ENIM (as % of avg. assets) 3.5% 3.2% 3.4% 3.4% 3.5% Loans 16.7% 19.7% 20.3% 16.5 16.4%Earning assets/assets 96.0% 96.3% 96.6% 96.6% 96.6% Deposits 12.7% 15.0% 21.3% 16.9 16.7%Margins (as % of Avg. Assets) 3.3% 3.1% 3.2% 3.3% 3.4% Assets 11.0% 16.6% 18.1% 15.7 15.7%

Equity 27.3% 17.7% 11.3% 12.5 14.0%Net Interest Income 578,778 611,602 752,005 901,370 1,061,415 RWA 11.0% 16.6% 14.0% 14.0 14.0%

Total Non-Interest Income 318,354 291,655 321,223 352,444 386,733 Net Interest Income 27.1% 5.7% 23.0% 19.9 17.8%Fee Income 0 0 0 0 0 Non-Interest Income 72.8% (8.4%) 10.1% 9.7 9.7%

of which Fee Grth - - - - -Total operat ing revenues 897,132 903,257 1,073,228 1,253,814 1,448,149 Revenues 40.2% 0.7% 18.8% 16.8 15.5%

Costs 47.4% 12.7% 13.4% 13.6 13.8%Operating costs (468,560) (528,198) (598,772) (680,373) (773,978) Pre-Provis ion Profi ts 33.2% (12.5%) 26.5% 20.9 17.6%

Loan Loss Provisions 22.0% (7.4%) 53.8% 17.1 9.2%Pre-Prov. Profits 428,572 375,059 474,456 573,440 674,170 Pre-Tax 23.6% 5.2% (2.2%) 22.9 24.4%Provisions (162,444) (150,403) (231,332) (270,872) (295,772) At tributable Income 42.9% 14.7% (3.3%) 22.9 24.4%Other Inc (treasury Income) - - - - - EPS 35.2% 12.5% (3.3%) 22.9 24.4%Other Exp. - - - - - DPS 16.7% 0.0% 29.2% 20.0 20.0%Exceptionals (19,999) 34,162 10,000 8,400 8,400

Associate - - - - - Balance Sheet Gearing FY12 FY13 F Y14E FY15E FY16EPre- ax 246,128 258,818 253,125 310,968 386,798 Loan/deposit 82.3% 85.6% 84.7% 84.0 83.5%Tax (86,396) (75,589) (75,937) (93,290) (116,039) Investment/assets 5.9% 5.7% 5.4% 5.1 4.8%Minorities 0 0 0 0 0 Loan/Assets 63.8% 66.3% 67.7% 68.6 69.0%

Attributable Income 159,732 183,229 177,187 217,678 270,759 Customer deposits/liab. 82.2% 81.2% 83.1% 83.8 84.5%LT debt/liabilities 9.2% 9.7% 9.3% 8.2 7.6%

Asset Quality/Capital FY12 FY13 FY14E F Y15E F Y16E


EPS 238.04 267.87 259.03 318.23 395.83 NPLs/loans 3.8% 4.4% 4.7% 5.2 5.5%DPS 35.00 35.00 45.24 54.28 65.14 Specific loan loss reserves/NPLs 54.8% 56.4% 55.0% 56.7 59.1%Payout 14.7% 13.1% 17.5% 17.1% 16.5% Growth in NPLs 57.1% 26.0% 31.9% 27.5 23.3%

Book value 1,583.07 1,827.88 2,033.99 2,288.70 2,608.32 Tier 1 Ratio 9.8% 9.5% 9.0% 8.6 8.3%

Fully Diluted Shares 671 684 684 684 684 Total CAR 13.9% 12.9% 11.9% 11.2 10.5%Key Balance sheet Rs in millions FY12 FY13 FY14E FY15E FY16E Du-Pont Analysis FY12 FY13 FY14E FY15E FY16E

Net Loans 11,636,702 13,926,080 16,711,296 19,385,104 22,486,720 NIM (as % of avg. assets) 3.5% 3.2% 3.4% 3.4 3.5%LLR (294,895) (352,051) (464,132) (623,932) (795,515) Earning assets/assets 96.0% 96.3% 96.6% 96.6 96.6%Gross Loans 11,931,597 14,278,131 17,175,429 20,009,036 23,282,235 Margins (as % of Avg. Assets) 3.3% 3.1% 3.2% 3.3 3.4%

NPLs 507,735 639,874 843,877 1,075,745 1,325,858 Non-Int. Rev./ Revenues 35.5% 32.3% 29.9% 28.1 26.7%Investments 1,065,152 1,200,899 1,320,609 1,439,046 1,571,921 Non IR/Avg. Assets 1.8% 1 .5% 1.4% 1.3 1.2%Other earning assets 666,124 623,056 742,912 864,162 1,004,707 Revenue/Assets 5.2% 4.6% 4.6% 4.6 4.6%

Avg. IEA 16,665,528 19,047,196 22,428,598 26,191,303 30,306,421 Cost /Income 52.2% 58.5% 55.8% 54.3 53.4%Goodwill - - - - - Cost/Assets 2.7% 2.7% 2.6% 2.5 2.5% Assets 18,262,305 21,289,045 25,139,980 29,092,483 33,668,935 Pre-Provision ROA 2.5% 1.9% 2.0% 2.1 2.1%

LLP/Loans (1.5%) (1.1%) (1.5%) (1.5%) (1.4%)Deposits 14,146,894 16,274,026 19,738,096 23,068,153 26,930,311 Loan/Assets 63.8% 66.3% 67.7% 68.6 69.0%Long- erm bond funding 1,579,914 2,037,232 2,023,995 2,174,219 2,327,202 Other Prov, Income/ Assets (0.1%) 0.2% 0.0% 0.0 0.0%

Other Borrowings 485,245 450,725 450,725 450,725 450,725 Operating ROA 1.5% 1.1% 1.0% 1.1 1.2% Avg. IBL 14,853,570 17,019,033 20,036,674 23,502,231 27,249,943 Pre-Tax ROA 1.4% 1.3% 1.1% 1.1 1.2%

Avg. Assets 17,355,737 19,775,675 23,214,512 27,116,232 31,380,709 Tax rate 35.1% 29.2% 30.0% 30.0 30.0%Common Equity 1,062,300 1,250,330 1,391,315 1,565,550 1,784,177 Minor it ies & Outside Distbn. 0.0% 0.0% 0.0% 0.0 0.0%RWA 11,751,362 13,698,997 15,616,857 17,803,217 20,295,667 ROA 1.0% 0.8% 0.7% 0.8 0.8% Avg. RWA 11,168,006 12,725,179 14,657,927 16,710,037 19,049,442 RORWA 1.6% 1.2% 1.1% 1.3 1.4%

Equity/Assets 5.5% 5.8% 5.7% 5.5 5.3%ROE 18.9% 12.9% 12.7% 14.2 15.7%




16



JPM Q-ProfileBank of Baroda (INDIA / Financials)As Of: 01-May-2014 [email protected]

Local Share Price Current: 819.50 12 Mth Forward EPS Current: 118.78

Earnings Yield (& local bond Yield) Current: 14% Implied Value Of Growth* Current: -5.19%

PE (1Yr Forward) Current: 6.9x Price/Book Value Current: 1.0x

ROE (Trailing) Current: 15.55 Dividend Yield (Trailing) Current: 2.98

Summary

Bank of Baroda 5807.74 As Of:

INDIA 2.131962 SEDOL 6099778 Local Price: 819.50

Financials Banks EPS: 118.78

Latest Min Max Median Average 2 S.D.+ 2 S.D. - % to Min % to Max % to Med % to Avg

12mth Forward PE 6.90x 1.52 10.95 5.60 5.23 9.50 0.97 -78% 59% -19% -24%

P/BV (Trailing) 1.04x 0.32 2.34 0.97 0.99 1.86 0.11 -69% 126% -7% -5%

Dividend Yield (Trailing) 2.98 1.31 11.20 2.96 4.01 9.12 -1.09 -56% 276% -1% 35%

ROE (Trailing) 15.55 8.88 23.62 15.55 16.73 24.39 9.08 -43% 52% 0% 8%

Implied Value of Growth -5.2% -3.59 0.25 -0.44 -0.77 0.90 -2.43 -6805% 574% -742% -1379%

Source: Bloomberg, Reuters Global Fundamentals, IBES CONSENSUS, J.P. Morgan Calcs * Implied Value Of Growth = (1 - EY/Cost of equity) where cost of equity =Bond Yield + 5.0% (ERP)

1-May-14

-100.00

-50.00

0.00

50.00

100.00

150.00

200.00

M

a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M

a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M

a r / 1 3

O c t / 1 3

M a y / 1 4

0%

10%

20%

30%

40%

50%

60%

70%

M a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M a y / 1 4

12Mth fwd EY India BY Proxy

0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4

-4.00

-3.50

-3.00

-2.50

-2.00

-1.50

-1.00

-0.50

0.000.50

1.00

1.50

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

M a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M a y / 1 4

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4

PBV hist PBV Forward

0.00

5.00

10.00

15.00

20.00

25.00

M

a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M

a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M

a r / 1 3

O c t / 1 3

M a y / 1 4 0.0

2.0

4.0

6.0

8.0

10.0

12.0

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4



17



JPM Q-ProfileBank of India (INDIA / Financials)As Of: 01-May-2014 [email protected]


Earnings Yield (& local bond Yield) Current: 23% Implied Value Of Growth* Current: - 69 .26%



Summary

Bank of India 2513.88 As Of:




12mth Forward PE 4.29x 1.68 11.73 5.24 5.30 9.53 1.08 -61% 173% 22% 24%

P/BV (Trailing) 0.57x 0.25 2.96 0.88 0.98 2.11 -0.14 -57% 418% 55% 73%

Dividend Yield (Trailing) 4.38 0.96 14.60 2.67 4.29 10.54 -1.96 -78% 234% -39% -2%

ROE (Trailing) 12.29 7.03 26.91 14.90 16.14 29.60 2.67 -43% 119% 21% 31%

Implied Value of Growth -69.3% -3.91 0.30 -0.48 -0.70 0.89 -2.30 -465% 143% 31% -2%


1-May-14

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

100.00

M

a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M

a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M

a r / 1 3

O c t / 1 3

M a y / 1 4

0%

10%

20%

30%

40%

50%

60%

70%

M a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M a y / 1 4


0.00

100.00

200.00

300.00

400.00

500.00

600.00

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4

-5.00

-4.00

-3.00

-2.00

-1.00

0.00

1.00

2.00

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

M a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M a y / 1 4

-0.5x

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4


0.00

5.00

10.00

15.00

20.00

25.00

30.00

M

a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M

a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M

a r / 1 3

O c t / 1 3

M a y / 1 4 0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4



18



JPM Q-ProfilePunjab National Bank (INDIA / Financials)As Of: 01-May-2014 [email protected]


Earnings Yield (& local bond Yield) Current: 17% Implied Value Of Growth* Current: - 25 .74%



Summary

Punjab National Bank 4710.25 As Of:




12mth Forward PE 5.77x 2.92 9.84 6.39 6.22 9.21 3.24 -49% 70% 11% 8%

P/BV (Trailing) 0.80x 0.44 2.23 1.35 1.33 2.15 0.51 -45% 177% 68% 65%

Dividend Yield (Trailing) 3.63 0.87 6.28 2.06 2.32 4.40 0.24 -76% 73% -43% -36%

ROE (Trailing) 15.56 15.56 24.32 19.40 19.66 25.82 13.51 0% 56% 25% 26%

Implied Value of Growth -25.7% -1.59 0.16 -0.35 -0.38 0.25 -1.01 -519% 163% -35% -48%


1-May-14

-50.00

0.00

50.00

100.00

150.00

200.00

250.00

M

a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M

a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M

a r / 1 3

O c t / 1 3

M a y / 1 4

0%

5%

10%

15%

20%

25%

30%

35%

40%

M a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M a y / 1 4


0.00

200.00

400.00

600.00

800.00

1,000.00

1,200.00

1,400.00

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4

-2.00

-1.50

-1.00

-0.50

0.00

0.50

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

M a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M a y / 1 4

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4


0.00

5.00

10.00

15.00

20.00

25.00

30.00

M

a r / 9 9

O c t / 9 9

M a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M

a r / 0 6

O c t / 0 6

M a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M

a r / 1 3

O c t / 1 3

M a y / 1 4 0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

M a r / 9 9

O c t / 9 9

M

a y / 0 0

D e c / 0 0

J u l / 0 1

F e b / 0 2

S e p / 0 2

A p r / 0 3

N o v / 0 3

J u n / 0 4

J a n / 0 5

A u g / 0 5

M a r / 0 6

O c t / 0 6

M

a y / 0 7

D e c / 0 7

J u l / 0 8

F e b / 0 9

S e p / 0 9

A p r / 1 0

N o v / 1 0

J u n / 1 1

J a n / 1 2

A u g / 1 2

M a r / 1 3

O c t / 1 3

M

a y / 1 4



20



Analyst Certification: The research analyst(s) denoted by an “AC” on the cover of this report certifies (or, where multiple researchanalysts are primarily responsible for this report, the research analyst denoted by an “AC” on the cover or within the document

individually certifies, with respect to each security or issuer that the research analyst covers in this research) that: (1) all of the viewsexpressed in this report accurately reflect his or her personal views about any and all of the subject securities or issuers; and (2) no part ofany of the research analyst's compensation was, is, or will be directly or indirectly related to the specific recommendations or viewsexpressed by the research analyst(s) in this report. For all Korea-based research analysts listed on the front cover, they also certify, as perKOFIA requirements, that their analysis was made in good faith and that the views reflect their own opinion, without undue influence orintervention.

Important Disclosures

Lead or Co-manager: J.P. Morgan acted as lead or co-manager in a public offering of equity and/or debt securities for Bank of

Baroda, State Bank of India within the past 12 months.

Beneficial Ownership (1% or more): J.P. Morgan beneficially owns 1% or more of a class of common equity securities of Bank of

Baroda.

Client: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients: Bank of Baroda, Bank of

India, Punjab National Bank, State Bank of India.

Client/Investment Banking: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as investment

banking clients: Bank of Baroda, Bank of India, State Bank of India.

Client/Non-Investment Banking, Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following

company(ies) as clients, and the services provided were non-investment-banking, securities-related: Bank of Baroda, Bank of India,Punjab National Bank, State Bank of India.

Client/Non-Securities-Related: J.P. Morgan currently has, or had within the past 12 months, the following company(ies) as clients,

and the services provided were non-securities-related: Bank of Baroda, Bank of India, Punjab National Bank, State Bank of India.

Investment Banking (past 12 months): J.P. Morgan received in the past 12 months compensation from investment banking Bank of

Baroda, Bank of India, State Bank of India.

Investment Banking (next 3 months): J.P. Morgan expects to receive, or intends to seek, compensation for investment banking

services in the next three months from Bank of Baroda, Bank of India, State Bank of India.

Non-Investment Banking Compensation: J.P. Morgan has received compensation in the past 12 months for products or servicesother than investment banking from Bank of Baroda, Bank of India, Punjab National Bank, State Bank of India.

“J.P. Morgan Securities plc (“J.P. Morgan”) is acting as a Joint bookrunner to State Bank of India (SBI) for its Fixed Rate Senior

Unsecured Notes issuance as announced on 10 April 2014. J.P. Morgan will be receiving fees for so acting. J.P. Morgan and its affiliatesmay perform, or may seek to perform, other financial or advisory services for SBI or its affiliates and may have other interests in orrelationships with SBI or its affiliates, and receive fees, commissions or other compensation in such capacities. This research report andthe information herein is not intended to serve as an endorsement of the proposed transaction or result in procurement, withholding orrevocation of a proxy or any other action by a security holder. This report is based solely on publicly available information. Norepresentation is made that it is accurate or complete.”

Company-Specific Disclosures: Important disclosures, including price charts, are available for compendium reports and all J.P. Morgan– covered companies by visiting https://jpmm.com/research/disclosures , calling 1-800-477-0406, or [email protected] with your request. J.P. Morgan’s Strategy, Technical, and Quantitative Research teams mayscreen companies not covered by J.P. Morgan. For important disclosures for these companies, please call 1-800-477-0406 or [email protected] .

https://jpmm.com/research/disclosures


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21



Date Rating Share Price(Rs)

Price Target(Rs)

21-Nov-07 N 357.25 420.00

09-Mar-10 UW 610.35 590.00

30-Jul-10 N 734.20 800.00

02-Oct-10 OW 887.20 1025.00

29-Oct-10 OW 1011.00 1125.00

06-Mar-11 OW 883.25 1050.00

29-Apr-11 N 990.30 1000.00

01-Jun-11 N 839.20 900.00

13-Jan-12 N 728.20 750.00

26-Jan-12 UW 760.25 675.00

31-Jul-12 UW 672.40 650.00

11-Sep-12 UW 633.10 600.00

21-Nov-12 UW 731.20 700.00

11-Apr-13 UW 648.75 625.00

19-May-13 OW 734.65 850.00

09-Sep-13 OW 481.55 600.00

01-Nov-13 OW 642.90 680.00

06-Jan-14 NR 637.25 --

19-Mar-14 OW 659.60 725.00

23-Apr-14 OW 806.55 850.00


Price Target(Rs)

18-Oct-06 UW 159.90 110.00

21-Nov-07 N 348.50 380.00

09-Mar-10 UW 341.05 340.00

11-Aug-10 OW 438.65 485.00

02-Oct-10 OW 525.10 590.00

24-Oct-10 N 537.45 590.00

06-Jan-11 OW 443.15 590.00

06-Mar-11 OW 460.35 520.00

03-May-11 N 457.10 450.00

01-Jun-11 UW 440.80 405.00

26-Jul-11 UW 403.30 360.00

08-Nov-11 UW 341.75 315.00

13-Jan-12 UW 299.80 270.00

11-Sep-12 UW 261.00 250.00

19-May-13 UW 321.60 275.00

27-Jul-13 UW 183.00 175.00

26-Feb-14 UW 169.00 150.00

0

279

558

837

1,116

1,395

1,674

Price(Rs)

Oct

06

Apr

08

Oct

09

Apr

11

Oct

12

Apr

14

Bank of Baroda (BOB.BO, BOB IN) Price Chart

OW Rs1,125N Rs900 UW Rs700 NR

OW Rs1,025N Rs1,000UW Rs675UW Rs600OW Rs850OW Rs680OW Rs8

N Rs420 UW Rs590N Rs800OW Rs1,050 N Rs750UW Rs650UW Rs625OW Rs600OW Rs7

Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.

Break in coverage Jan 06, 2014 - Mar 19, 2014.

0

150

300

450

600

750

900

Price(Rs)

Oct

06

Apr

08

Oct

09

Apr

11

Oct

12

Apr

14

Bank of India (BOI.BO, BOI IN) Price Chart

N Rs590N Rs450

OW Rs590OW Rs520UW Rs360UW Rs270 UW Rs175

Rs110 N Rs380 UW Rs340OW Rs485OW Rs590UW Rs405UW Rs315UW Rs250UW Rs275UW Rs15


Initiated coverage Oct 18, 2006.



22




Price Target(Rs)

20-Nov-07 UW 612.45 678.00

21-Nov-07 OW 553.30 678.00

08-Mar-10 OW 927.15 1000.00

10-May-10 N 1014.05 1050.00

27-Jul-10 OW 1051.10 1200.00

02-Oct-10 OW 1307.80 1525.00

06-Mar-11 OW 1081.40 1350.00

05-May-11 OW 1091.50 1300.00

01-Jun-11 OW 1070.45 1200.00

13-Jan-12 OW 902.85 975.00

01-Feb-12 UW 955.80 850.00

10-May-12 UW 783.95 700.00

28-Jul-12 UW 755.95 675.00

11-Sep-12 UW 685.95 650.00

21-Nov-12 UW 727.65 700.00

11-Apr-13 UW 709.60 650.00

19-May-13 OW 835.50 925.00

27-Jul-13 OW 593.90 840.00

09-Sep-13 OW 463.75 550.00

08-Oct-13 UW 467.40 450.00

26-Feb-14 UW 538.00 430.00


Price Target(Rs)

20-Nov-07 OW 2174.72 2847.00

06-Jan-10 N 2305.80 2300.00

09-Mar-10 N 2044.60 2100.00

11-Aug-10 UW 2650.85 2400.00

02-Oct-10 N 3240.45 3300.00

14-Jan-11 N 2560.70 2800.0025-Apr-11 OW 2861.15 3200.00

18-May-11 OW 2414.70 3000.00

01-Jun-11 OW 2297.95 2700.00

14-Aug-11 OW 2197.00 2400.00

13-Jan-12 OW 1764.40 1950.00

06-Mar-12 OW 2176.05 2300.00

11-Aug-12 OW 1887.75 2100.00

21-Nov-12 OW 2061.00 2300.00

04-Jan-13 OW 2486.70 2600.00

11-Apr-13 OW 2042.35 2200.00

19-May-13 OW 2424.85 2700.00

13-Aug-13 OW 1605.35 2450.00

09-Sep-13 OW 1634.55 2050.00

08-Oct-13 N 1633.05 1800.00

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire period.J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated

Explanation of Equity Research Ratings, Designations and Analyst(s) Coverage Universe:J.P. Morgan uses the following rating system: Overweight [Over the next six to twelve months, we expect this stock will outperform theaverage total return of the stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Neutral [Over the next six to twelvemonths, we expect this stock will perform in line with the average total return of the stocks in the analyst’s (or the analyst’s team’s)coverage universe.] Underweight [Over the next six to twelve months, we expect this stock will underperform the average total return ofthe stocks in the analyst’s (or the analyst’s team’s) coverage universe.] Not Rated (NR): J.P. Morgan has removed the rating and, ifapplicable, the price target, for this stock because of either a lack of a sufficient fundamental basis or for legal, regulatory or policy

0

361

722

1,083

1,444

1,805

2,166

Price(Rs)

Oct

06

Apr

08

Oct

09

Apr

11

Oct

12

Apr

14

Punjab National Bank (PNBK.BO, PNB IN) Price Chart

OW Rs1,200OW Rs1,200UW Rs700UW Rs700OW Rs840

OW Rs678 N Rs1,050 OW Rs1,300UW Rs850UW Rs650OW Rs925UW Rs450

UW Rs678 OW Rs1,000OW Rs1,525OW Rs1,350OW Rs975UW Rs675UW Rs650OW Rs550UW Rs43


Initiated coverage Nov 20, 2007.

0

878

1,756

2,634

3,512

4,390

5,268

Price(Rs)

Oct

06

Apr

08

Oct

09

Apr

11

Oct

12

Apr

14

State Bank of India (SBI.BO, SBIN IN) Price Chart

OW Rs2,700 OW Rs2,200OW Rs2,050

N Rs2,100N Rs3,300OW Rs3,000OW Rs2,300OW Rs2,600OW Rs2,450

OW Rs2,847 N Rs2,300UW Rs2,400N Rs2,800OW Rs3,200OW Rs2,400OW Rs1,950OW Rs2,100OW Rs2,300OW Rs2,700N Rs1,800


Initiated coverage Nov 20, 2007.



23



reasons. The previous rating and, if applicable, the price target, no longer should be relied upon. An NR designation is not arecommendation or a rating. In our Asia (ex-Australia) and U.K. small- and mid-cap equity research, each stock’s expected total return iscompared to the expected total return of a benchmark country market index, not to those analysts’ coverage universe. If it does not appear

in the Important Disclosures section of this report, the certifying analyst’s coverage universe can be found on J.P. Morgan’s researchwebsite, www.jpmorganmarkets.com.

Coverage Universe: Sen, Seshadri K : Axis Bank Ltd (AXBK.BO), Bank of Baroda (BOB.BO), Bank of India (BOI.BO), HDFC(Housing Development Finance Corporation) (HDFC.BO), HDFC Bank (HDBK.BO), ICICI Bank (ICBK.BO), IDFC (IDFC.BO), INGVysya Bank (VYSA.NS), IndusInd Bank (INBK.BO), Kotak Mahindra Bank (KTKM.BO), Punjab National Bank (PNBK.BO), StateBank of India (SBI.BO), Yes Bank (YESB.BO)

J.P. Morgan Equity Research Ratings Distribution, as of March 31, 2014

Overweight(buy)

Neutral(hold)

Underweight(sell)

J.P. Morgan Global Equity Research Coverage 44% 44% 11%IB clients* 58% 49% 40%

JPMS Equity Research Coverage 45% 48% 7%IB clients* 78% 67% 60%

*Percentage of investment banking clients in each rating category.For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a holdrating category; and our Underweight rating falls into a sell rating category. Please note that stocks with an NR designation are not included in the table

above.

Equity Valuation and Risks: For valuation methodology and risks associated with covered companies or price targets for coveredcompanies, please see the most recent company-specific research report at http://www.jpmorganmarkets.com, contact the primary analystor your J.P. Morgan representative, or email [email protected] .

Equity Analysts' Compensation: The equity research analysts responsible for the preparation of this report receive compensation basedupon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues.

Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-USaffiliates of JPMS, are not registered/qualified as research analysts under NASD/NYSE rules, may not be associated persons of JPMS,and may not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public

appearances, and trading securities held by a research analyst account.

Other Disclosures

J.P. Morgan ("JPM") is the global brand name for J.P. Morgan Securities LLC ("JPMS") and its affiliates worldwide. J.P. Morgan Cazenove is a marketing

name for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase & Co. and its subsidiaries.

All research reports made available to clients are simultaneously available on our client website, J.P. Morgan Markets. Not all research content isredistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your salesrepresentative.

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received the proper option risk disclosure documents. For a copy of the Option Clearing Corporation's Characteristics and Risks of Standardized Options, please contact your J.P. Morgan Representative or visit the OCC's website at http://www.optionsclearing.com/publications/risks/riskstoc.pdf

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regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England & Wales No. 2711006. Registered Office 25Bank Street, London, E14 5JP. South Africa: J.P. Morgan Equities South Africa Proprietary Limited is a member of the Johannesburg SecuritiesExchange and is regulated by the Financial Services Board. Hong Kong: J.P. Morgan Securities (Asia Pacific) Limited (CE number AAJ321) is regulated

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"Other Disclosures" last revised April 5, 2014.

Copyright 2014 JPMorgan Chase & Co. All rights reserved. This report or any portion hereof may not be reprinted, sold orredistributed without the written consent of J.P. Morgan. #$J&098$#*P

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