KEY DATA At tipping point - edelweissresearch.com

Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset Edelweiss Securities Limited

KEY DATA

Rating HOLD Sector relative Neutral Price (INR) 8,938 12 month price target (INR) 10,100 Market cap (INR bn/USD bn) 1,422/19.5 Free float/Foreign ownership (%) 39.2/8.0

What’s Changed Target Price

Rating/Risk Rating ⚊

QUICK TAKE

At tipping point

Bajaj Finserv reported 15% increase in Q3FY21 PAT to INR12.9bn largely due to better profitability of general insurance (GI) subsidiary; profit of life insurance subsidiary and Bajaj Finance (BAF) declined 17% and 29% YoY, respectively. GI’s PAT jumped 72% YoY due to better underwriting performance.

Underlying metrics improved across businesses with: a) cyclical recovery in AUM and pick up in disbursements; b) better underwriting performance in GI along with market share gains; and c) pick up in new individual business with preference for guaranteed products. Maintain ‘HOLD’ with revised TP of INR10,100 (INR7,200 earlier; change mostly from BAF stock price).

FINANCIALS (standalone) (INR mn)

Year to March FY20A FY21E FY22E FY23E

Total income 5,677 6,511 7,474 9,550

Total expense 1,336 1,624 1,858 2,300

PBT 4,324 4,870 5,598 7,232

PAT 3,805 3,993 4,590 5,930

Diluted EPS 23.9 25.1 28.8 37.3

DPS 1.6 1.6 1.6 1.6

Networth 35,354 39,097 43,438 49,117

Investments 32,761 36,222 40,176 45,434

Total assets 35,481 39,297 43,638 49,317

PRICE PERFORMANCE

Bajaj Finance signals return to ‘business as usual’

Management indicated granular recovery along with significant improvement in lead indicator risk metrics over the past three months. It expressed confidence in AUM growth returning to the 20-25% range with 1.5-1.7% GNPL and 20% RoE. We believe strong economic recovery and upfront recognition of asset quality pain should lead to significant rebound in FY22 earnings.

BAGIC: Strong underwriting performance led by lower loss ratio

GWP increased 11% in Q3FY21, outperforming industry growth of 2%, as it continues to grow in the preferred areas of private cars, two wheelers and property. Motor OD claims and non-covid related health claims are back to pre-covid levels. Covid claims have significantly reduced over the past few weeks. Motor TP claims may rise in future as interest costs build up due to delayed court rulings, in our view.

BALIC: Growth momentum picking up

Individual NBP grew 14%--significantly outperforming industry dip of 9% and private industry growth of 3%--led by guaranteed products and protection. While preference for guaranteed products continues, demand for protection has slightly moderated due to price hike. ULIPs sparked initial signs of revival riding strong equity market performance in December 2020.

Explore:

Outlook and valuation: Growth visibility improves; maintain ‘HOLD’

While we structurally like most pieces of the story (life insurance clearly the least though), recent strong price action has rendered valuations rather full. Moreover, we do not alter our target multiple for non-listed businesses. Growth resumption at BFL will drive stock performance. We maintain ‘HOLD/SN’ with revised TP of 10,100.

Financials (standalone) Year to March Q3FY21 Q3FY20 % Change Q2FY21 % Change

Net Revenue 466.7 395.3 18.1 396.3 17.8

Profit before tax 100.8 61.1 65.0 9.3 n.a.

Profit after tax 84.0 31.9 163.3 6.4 n.a.

EPS 0.5 0.2 150.0 0.0 n.a.

*Stand

India Equity Research Insurance January 21, 2021

BAJAJ FINSERV RESULT UPDATE

Santanu Chakrabarti Vinayak Agarwal +91 (22) 4342 8680 +91 (22) 6620 3020 [email protected] [email protected]

Corporate access

Financial model Podcast

Video

https://www.edelweissresearch.com/Research/Company?Id=2200

https://www.edelweissresearch.com/Podcasts?Search=bajaj+finserv&FromDate=&ToDate=

https://www.edelweissresearch.com/CorporateAccess

https://www.edelweissresearch.com/Videos

BAJAJ FINSERV

Edelweiss Securities Limited

2 Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset

Financial Statements (Standalone) Income statement (INR mn) Year toMarch FY20A FY21E FY22E FY23E

Operating income 5,430 6,190 7,060 8,820

Other income 250 320 410 730

Total income 5,680 6,510 7,470 9,550

Other expenses 738 912 1,046 1,241

Employee expenses 597 712 812 1,059

Total expense 1,336 1,624 1,858 2,300

Gross profit 4,342 4,888 5,616 7,250

Depreciation 18 18 18 18

Profit before tax 4,324 4,870 5,598 7,232

Tax 519 877 1,008 1,302

Profit after tax 3,805 3,993 4,590 5,930

Extraordinary items 0 0 0 0

Adjusted net profit 3,805 3,993 4,590 5,930

EPS (INR) 23.9 25.1 28.8 25.0

DPS (INR) 1.6 1.6 1.6 1.6

Payout ratio 6.5 6.2 5.4 4.2

Key Ratios (%)


GDP 4.8 (7.0) 7.0 6.0

Repo rate 4.4 3.0 4.0 4.0

BAGIC

Premium growth 15.5 18.0 18.1 20.0

Combined ratio 97.1 95.8 95.5 95.5

BALIC

APE growth 23.0 22.0 22.0 22.0

Source: Company and Edelweiss estimates

Balance Sheet (INR mn) Year to March FY20A FY21E FY22E FY23E

Share capital 796 796 796 796

Reserves 34,559 38,302 42,642 48,322

Net worth 35,354 39,097 43,438 49,117

Other liabilities 127 200 200 200

Total Liabilities 35,481 39,297 43,638 49,317

Application of funds

Gross block 4,173 4,373 4,573 4,773

Less: Acc dep 2,589 2,604 2,619 2,634

Net block 1,584 1,769 1,954 2,139

Investments 32,761 36,222 40,176 45,434

Current assets 649 736 810 891

Less: Current liabilities 320 352 387 426

Net current assets 349 384 422 465

Net deferred tax 111 111 111 111

Other assets 677 812 975 1,170

Total assets 35,481 39,297 43,638 49,317

Growth


Tax rate 12.0 18.0 18.0 18.0

Book value (INR) 22.2 24.4 27.0 28.0

EPS (INR) 23.9 25.1 28.8 25.0

DPS (INR) 1.6 1.6 1.6 1.6

Consolidated PAT (%)


Standalone 7.7 6.0 6.0 6.0

BAGIC 14.6 17.7 17.7 17.7

BALIC 13.7 10.7 10.7 10.7

Bajaj Finance 64.1 65.6 65.6 65.6

Bajaj Allianz Fin Dis 0.0 0.0 0.0 0.0

Bajaj Financial Sol (0.1) (0.1) (0.1) (0.1)

Total 100.0 100.0 100.0 100.0


BAJAJ FINSERV

Edelweiss Research is also available on www.edelweissresearch.com, Bloomberg - EDEL, Thomson Reuters, and Factset 3

SOTP valuation

Source: Company, Edelweiss research

Business (FY22) Method INR mn Multiple

Business

Valuation Stake

Bajaj Finserv

valuation Per share

BAGIC Price to Earnings 19,692 25.0 4,92,301 74% 3,64,303 2,289

BALIC Appraisal Value 1,63,358 1.0 1,63,358 74% 1,20,885 760

Bajaj Finance CMP of INR5,167 31,37,702 53% 16,54,824 10,399

Total 13,448

Less: Holding co. disc. 25% 3,362

Sum of Parts* 10,086

*TP (RO) to INR10,100

BAJAJ FINSERV



Q3FY21 conference call highlights

Current environment

Momentum is picking up with improvement in broad economic indicators.

Continues to focus on adopting digital means as a way of conducting business.

Digital penetration has improved across all processes for both insurance arms.

General insurance (BAGIC)

GWP increased 11% in Q3FY21 compared to industry growth of 2% as the

company continues to grow in preferred areas of private cars, two wheelers and

property.

Motor insurance has turned around and is now gaining decent traction.

CV sales fell 19% driven by high exposure in the profitable passenger carrying

vehicle segment, which is still below pre-covid level.

Demand for retail health insurance has moderated as Q1/Q2 was supported by

covid related policies along with recent price hike by the company and peers.

Remains cautious on group health.

Fire continues to drive growth by rate increases; more profitable segments have

seen lower rate hikes.

Crop has remained stable over the past six years; underwriting is important here

as it is not a float business–depends heavily on reinsurance due to inherent

volatile nature.

As a company, wants to be active in all lines of insurance.

Combined ratio improved by 750bps YoY in Q3FY21 to 96.1% primarily due to

lower claims.

Motor OD claims are almost at pre-covid level as the situation on ground

normalizes.

Court closures have led to delay in Motor Accident Tribunal cases, TP claim

settlement and could lead to interest cost on such claims.

Non-covid retail health claims are inching back to pre-covid level as people have

restarted going to hospitals for non-emergency services.

Covid claims have reduced significantly over the past few weeks and are in

proportion to overall health market share, that is 4%.

Health claims should be seen in aggregate as people were avoiding going to

hospitals a couple of months back for procedures which could be delayed.

Health business is at a nascent stage and the company has committed INR1bn to

build this forward. This will eventually help customers in their healthcare journey

right from booking a consultation to making a claim.

Life insurance (BALIC)

Continued to focus on sustainable and profitable growth by maintaining

balanced product mix and investment in retail growth engines.

Optimistic going into Q4, typically a strong quarter.


BAJAJ FINSERV


Demand for ULIPs has improved on strong equity markets.

Protection has seen moderation due to price hike and strong Q1/Q2.

Guaranteed products continue to do well led by customer preference.

Protection will continue to be an important part of strategy.

Comfortable with current hedging strategy on interest rate risk pertaining to

guaranteed products.

Institutional business is in growth mode with momentum build up in new

partnerships like Axis Bank, IDFC First Bank, RBL Bank and India Post Payments

Bank.

Consistently reported industry beating individual rated premium growth.

Group protection business fell 12% due to lower disbursements by banks and

NBFCs.

Persistency ratio in near term cohorts (13th and 25th month) dipped, while other

cohorts (37th, 49th and 61st month) held up well.

Slight dip in persistency for ULIP policies above INR0.3mn.

5% dip in persistency for segments where unemployment has been affected.

Self-employed segment has also been affected as people prefer to conserve cash

to invest in business or set aside for liquidity.

BAJAJ FINSERV



Company Description

Bajaj Finserv was formed as a result of its demerger from Bajaj Auto to act as a pure

play financial services business. The company holds stakes in Bajaj Allianz Life (sixth

largest private insurer (BALIC), Bajaj Allianz General Insurance (BAGIC) (second

largest general insurer), Bajaj Finance (BFL) and Bajaj Financial Solutions.

Bajaj Allianz Life Insurance - BALIC is a joint venture between Allianz (26%) and Bajaj

Finserv (74%).

Bajaj Allianz General Insurance - BAGIC is a joint venture between Allianz (26%) and

Bajaj Finserv (74%).

BFL is a diversified NBFC present in consumer finance, SME and commercial lending

business. It operates across various business verticals with total AUM of INR>1tn.

Bajaj Financial Solutions (BFS) is a wealth management and advisory services player.

It provides financial advisory services for a holistic financial plan to customers.

Bajaj Finserv has wind farm assets, comprising windmills in Maharashtra. All

windmills are registered with REC registry of India through Maharashtra Energy

Development Agency (MEDA) and are eligible for Renewable Energy Certificates

(REC)

Investment Theme

While we like the sustained momentum in operating variables, risk aversion in the

current environment and moderation of customer demand warrant a valuation

rationalisation. Despite the deep correction in prices, we do anticipate uncertainty

to persist in the near term.

Key Risks

Further deterioration in persistency ratio of life insurance business

Introduction of direct tax code will increase tax rates and significantly impact

margins and profit


BAJAJ FINSERV


Additional Data Management

CEO Sanjiv Bajaj

CFO S Sreenivasan

CEO, LI Tarun Chugh

CEO, GI Tapan Singhel

Auditor SRBC & Co LLP

Holdings – Top 10* % Holding % Holding

JPMorgan Funds 3.61 Vanguard Group 0.82

Nomura Holdings 1.08 Fidelity Intern 0.67

Capital Group 1.05 SBI Funds Manag 0.55

BlackRock Inc 0.98 Kotak Mahindra 0.29

Motilal Oswal A 0.91 Mirae Asset Glo 0.29

*Latest public data

Recent Company Research Date Title Price Reco

22-Oct-20 General insurance leads the field; Result Update

5904.15 Hold

24-Jul-20 Bajaj Finserv - Result Update Q1FY21 - G; Result Update

6381 Hold

23-May-20 Bajaj Finserv - Result Update Q4FY20 - C; Result Update

4330 Reduce

Recent Sector Research Date Name of Co./Sector Title

19-Jan-21 ICICI Lombard GI One-off costs take the sheen off; Result Update

25-Nov-20 ICICI Lombard GI A compounding machine; Company Update

01-Nov-20 Max Financial Margin beat led by non-par sales; Result Update

Rating Interpretation

Source: Bloomberg, Edelweiss research

Daily Volume

Source: Bloomberg

Rating Distribution: Edelweiss Research Coverage

Buy Hold Reduce Total

Rating Distribution* 163 64 14 241

>50bn >10bn and <50bn <10bn Total

Market Cap (INR) 191 56 4 251

* stocks under review

Rating Rationale

Rating Expected absolute returns over 12 months

Buy: >15%

Hold: >15% and <-5%

Reduce: <-5%

TP5,560

TP5,948

TP7,200

TP6,481

TP6,938

4075

5240

6405

7570

8735

9900

Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20

(IN

R)

BJFIN IN Equity Buy Hold Reduce0

2

4

6

8

10

Oct-17 Apr-18 Oct-18 Apr-19 Oct-19 Apr-20

(Mn

)

BAJAJ FINSERV



DISCLAIMER Edelweiss Securities Limited (“ESL” or “Research Entity”) is regulated by the Securities and Exchange Board of India (“SEBI”) and is licensed to carry on the business of broking, depository services and related activities. The business of ESL and its Associates (list available on www.edelweissfin.com) are organized around five broad business groups – Credit including Housing and SME Finance, Commodities, Financial Markets, Asset Management and Life Insurance.

This Report has been prepared by Edelweiss Securities Limited in the capacity of a Research Analyst having SEBI Registration No.INH200000121 and distributed as per SEBI (Research Analysts) Regulations 2014. This report does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. Securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 includes Financial Instruments and Currency Derivatives. The information contained herein is from publicly available data or other sources believed to be reliable. This report is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this report should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in Securities referred to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. The investment discussed or views expressed may not be suitable for all investors.

This information is strictly confidential and is being furnished to you solely for your information. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law, regulation or which would subject ESL and associates / group companies to any registration or licensing requirements within such jurisdiction. The distribution of this report in certain jurisdictions may be restricted by law, and persons in whose possession this report comes, should observe, any such restrictions. The information given in this report is as of the date of this report and there can be no assurance that future results or events will be consistent with this information. This information is subject to change without any prior notice. ESL reserves the right to make modifications and alterations to this statement as may be required from time to time. ESL or any of its associates / group companies shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. ESL is committed to providing independent and transparent recommendation to its clients. Neither ESL nor any of its associates, group companies, directors, employees, agents or representatives shall be liable for any damages whether direct, indirect, special or consequential including loss of revenue or lost profits that may arise from or in connection with the use of the information. Our proprietary trading and investment businesses may make investment decisions that are inconsistent with the recommendations expressed herein. Past performance is not necessarily a guide to future performance .The disclosures of interest statements incorporated in this report are provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. The information provided in these reports remains, unless otherwise stated, the copyright of ESL. All layout, design, original artwork, concepts and other Intellectual Properties, remains the property and copyright of ESL and may not be used in any form or for any purpose whatsoever by any party without the express written permission of the copyright holders.

ESL shall not be liable for any delay or any other interruption which may occur in presenting the data due to any reason including network (Internet) reasons or snags in the system, break down of the system or any other equipment, server breakdown, maintenance shutdown, breakdown of communication services or inability of the ESL to present the data. In no event shall ESL be liable for any damages, including without limitation direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with the data presented by the ESL through this report.

We offer our research services to clients as well as our prospects. Though this report is disseminated to all the customers simultaneously, not all customers may receive this report at the same time. We will not treat recipients as customers by virtue of their receiving this report.

ESL and its associates, officer, directors, and employees, research analyst (including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the

Securities, mentioned herein or (b) be engaged in any other transaction involving such Securities and earn brokerage or other compensation or act as a market maker in the financial

instruments of the subject company/company(ies) discussed herein or act as advisor or lender/borrower to such company(ies) or have other potential/material conflict of interest with

respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public appearance. ESL may have proprietary long/short

position in the above mentioned scrip(s) and therefore should be considered as interested. The views provided herein are general in nature and do not consider risk appetite or investment

objective of any particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business

with ESL.

ESL or its associates may have received compensation from the subject company in the past 12 months. ESL or its associates may have managed or co-managed public offering of securities for the subject company in the past 12 months. ESL or its associates may have received compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates may have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months. ESL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report. Research analyst or his/her relative or ESL’s associates may have financial interest in the subject company. ESL and/or its Group Companies, their Directors, affiliates and/or employees may have interests/ positions, financial or otherwise in the Securities/Currencies and other investment products mentioned in this report. ESL, its associates, research analyst and his/her relative may have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of research report or at the time of public appearance.

Participants in foreign exchange transactions may incur risks arising from several factors, including the following: ( i) exchange rates can be volatile and are subject to large fluctuations; ( ii) the value of currencies may be affected by numerous market factors, including world and national economic, political and regulatory events, events in equity and debt markets and changes in interest rates; and (iii) currencies may be subject to devaluation or government imposed exchange controls which could affect the value of the currency. Investors in securities such as ADRs and Currency Derivatives, whose values are affected by the currency of an underlying security, effectively assume currency risk.

Research analyst has served as an officer, director or employee of subject Company: No

ESL has financial interest in the subject companies: No

ESL’s Associates may have actual / beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report.

Research analyst or his/her relative has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No

ESL has actual/beneficial ownership of 1% or more securities of the subject company at the end of the month immediately preceding the date of publication of research report: No

Subject company may have been client during twelve months preceding the date of distribution of the research report.

There were no instances of non-compliance by ESL on any matter related to the capital markets, resulting in significant and material disciplinary action during the last three years except that ESL had submitted an offer of settlement with Securities and Exchange commission, USA (SEC) and the same has been accepted by SEC without admitting or denying the findings in relation to their charges of non registration as a broker dealer.

A graph of daily closing prices of the securities is also available at www.nseindia.com

Analyst Certification:

The analyst for this report certifies that all of the views expressed in this report accurately reflect his or her personal views about the subject company or companies and its or their securities, and no part of his or her compensation was, is or will be, directly or indirectly related to specific recommendations or views expressed in this report.


BAJAJ FINSERV


Additional Disclaimers

Disclaimer for U.S. Persons

This research report is a product of Edelweiss Securities Limited, which is the employer of the research analyst(s) who has prepared the research report. The research analyst(s) preparing the research report is/are resident outside the United States (U.S.) and are not associated persons of any U.S. regulated broker-dealer and therefore the analyst(s) is/are not subject to supervision by a U.S. broker-dealer, and is/are not required to satisfy the regulatory licensing requirements of FINRA or required to otherwise comply with U.S. rules or regulations regarding, among other things, communications with a subject company, public appearances and trading securities held by a research analyst account.

This report is intended for distribution by Edelweiss Securities Limited only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the U.S. Securities and Exchange Act, 1934 (the Exchange Act) and interpretations thereof by U.S. Securities and Exchange Commission (SEC) in reliance on Rule 15a 6(a)(2). If the recipient of this report is not a Major Institutional Investor as specified above, then it should not act upon this report and return the same to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any U.S. person, which is not the Major Institutional Investor.

In reliance on the exemption from registration provided by Rule 15a-6 of the Exchange Act and interpretations thereof by the SEC in order to conduct certain business with Major Institutional Investors, Edelweiss Securities Limited has entered into an agreement with a U.S. registered broker-dealer, Edelweiss Financial Services Inc. ("EFSI"). Transactions in securities discussed in this research report should be effected through Edelweiss Financial Services Inc.

Disclaimer for U.K. Persons

The contents of this research report have not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 ("FSMA"). In the United Kingdom, this research report is being distributed only to and is directed only at (a) persons who have professional experience in matters relating to investments falling within Article 19(5) of the FSMA (Financial Promotion) Order 2005 (the “Order”); (b) persons falling within Article 49(2)(a) to (d) of the Order (including high net worth companies and unincorporated associations); and (c) any other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”). This research report must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this research report relates is available only to relevant persons and will be engaged in only with relevant persons. Any person who is not a relevant person should not act or rely on this research report or any of its contents. This research report must not be distributed, published, reproduced or disclosed (in whole or in part) by recipients to any other person. Disclaimer for Canadian Persons

This research report is a product of Edelweiss Securities Limited ("ESL"), which is the employer of the research analysts who have prepared the research report. The research analysts preparing the research report are resident outside the Canada and are not associated persons of any Canadian registered adviser and/or dealer and, therefore, the analysts are not subject to supervision by a Canadian registered adviser and/or dealer, and are not required to satisfy the regulatory licensing requirements of the Ontario Securities Commission, other Canadian provincial securities regulators, the Investment Industry Regulatory Organization of Canada and are not required to otherwise comply with Canadian rules or regulations regarding, among other things, the research analysts' business or relationship with a subject company or trading of securities by a research analyst.

This report is intended for distribution by ESL only to "Permitted Clients" (as defined in National Instrument 31-103 ("NI 31-103")) who are resident in the Province of Ontario, Canada (an "Ontario Permitted Client"). If the recipient of this report is not an Ontario Permitted Client, as specified above, then the recipient should not act upon this report and should return the report to the sender. Further, this report may not be copied, duplicated and/or transmitted onward to any Canadian person.

ESL is relying on an exemption from the adviser and/or dealer registration requirements under NI 31-103 available to certain international advisers and/or dealers. Please be advised that (i) ESL is not registered in the Province of Ontario to trade in securities nor is it registered in the Province of Ontario to provide advice with respect to securities; (ii) ESL's head office or principal place of business is located in India; (iii) all or substantially all of ESL's assets may be situated outside of Canada; (iv) there may be difficulty enforcing legal rights against ESL because of the above; and (v) the name and address of the ESL's agent for service of process in the Province of Ontario is: Bamac Services Inc., 181 Bay Street, Suite 2100, Toronto, Ontario M5J 2T3 Canada.

Disclaimer for Singapore Persons

In Singapore, this report is being distributed by Edelweiss Investment Advisors Private Limited ("EIAPL") (Co. Reg. No. 201016306H) which is a holder of a capital markets services license and an exempt financial adviser in Singapore and (ii) solely to persons who qualify as "institutional investors" or "accredited investors" as defined in section 4A(1) of the Securities and Futures Act, Chapter 289 of Singapore ("the SFA"). Pursuant to regulations 33, 34, 35 and 36 of the Financial Advisers Regulations ("FAR"), sections 25, 27 and 36 of the Financial Advisers Act, Chapter 110 of Singapore shall not apply to EIAPL when providing any financial advisory services to an accredited investor (as defined in regulation 36 of the FAR. Persons in Singapore should contact EIAPL in respect of any matter arising from, or in connection with this publication/communication. This report is not suitable for private investors.

Disclaimer for Hong Kong persons

This report is distributed in Hong Kong by Edelweiss Securities (Hong Kong) Private Limited (ESHK), a licensed corporation (BOM -874) licensed and regulated by the Hong Kong Securities and Futures Commission (SFC) pursuant to Section 116(1) of the Securities and Futures Ordinance “SFO”. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The report also does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of any individual recipients. The Indian Analyst(s) who compile this report is/are not located in Hong Kong and is/are not licensed to carry on regulated activities in Hong Kong and does not / do not hold themselves out as being able to do so. Copyright 2009 Edelweiss Research (Edelweiss Securities Ltd). All rights reserved.

Aditya Narain

Head of Research

[email protected]

KEY DATA At tipping point - edelweissresearch.com

Documents

Transcript of KEY DATA At tipping point - edelweissresearch.com