Investment Banking Services - JMFL

27 February 2017 India | Banking sector | Sector Report
Indian Banking sector

The Suitors and the Proposals
There has been multiple media reports about a potential merger of Kotak Mahindra Bank Abhishek Murarka
abhishek.murarka@jmfl.com | +91-22-66303263
(KMB) with Axis Bank (AXSB). While it is impossible to comment on what will happen, it
Jayant Kharote
might be useful to know what the landscape would look like if a merger does happen. We jayant.kharote@jmfl.com | +91-22-66303099
have analysed the potential inclinations and reservations that each of the large private sector Karan Uberoi
banks, viz. ICICI Bank (ICICIBC), HDFC Bank (HDFCB), Indusind Bank (IIB), YES Bank (YES) and karan.uberoi@jmfl.com | Tel: (91 22) 66303082
KMB would have in viewing AXSB as a potential acquisition target. AXSB is currently the third Nikhil Walecha
nikhil.walecha@jmfl.com | Tel: (91 22) 66303027
largest private sector bank in India. A merger with or acquisition of AXSB would alter the
banking landscape and allow the acquirer to leapfrog several years into their individual
planning cycles. This would also be a threat to other banks which would either see a new
challenge from a larger competitor or lose out on a potential opportunity to multiply their
market share. However, a merger would come with its own share of challenges in
integration, management of stressed loans and weakening of profitability profile in the
medium term. The three mid-sized banks, i.e., KMB, IIB and YES each stand to benefit from
the merger in different ways.
 Who would be most interested in a merger? Analysing the fit, bank-wise: Five private
banks, viz. ICICIBC, HDFCB, IIB, KMB and YES would be the only contenders for a merger.
Other private banks are too small and Public sector banks are not even in the fray, having
enough battles of their own to fight. AXSB offers a strong retail assets and liabilities
franchise, well-spread branch network, diversified fee income and market leading
efficiency and productivity parameters. However, it comes with a large stressed corporate
portfolio, increasing pace of slippages outside the watch-list and potentially high loan loss
provisioning in FY18E/19E as well. We weigh the challenges and benefits for the banks
above to shorten the list of potential acquirers.
 Acquisition of / merger with AXSB – A Quantum leap for all: A merger with or an
acquisition of AXSB would add 4.3% to the acquirers loans market share, 3.4% to their
deposit market share, c.6.6% to the market share in ATMs and similarly for credit cards,
debit cards, mobile transactions, etc. The merger would add many years’ worth of growth
to the balance sheet. For instance, at a loan CAGR of 20%, KMB would take 6.4 years to
reach the post merger scale! The merger would greatly diversify the branch presence by
region (North/South/East/West) and increase rural penetration. An acquirer would get
strong foothold in South Indian region which has higher penetration of regional banks.
Product complentarities and acquisition of large secured retail portfolio would be other
attractions for an acquirer.
 Benefits and challenges of the merger with AXSB: The benefits of merging with AXSB
would be much more for the mid-sized banks like KMB, IIB and YES. These would benefit
substantially from the higher savings account (SA) ratio of AXSB. Having achieved critical
scale after a merger, the acquirer could drop their differential SA rates in-line with the
large banks. This would be margin accretive. A large customer base with strong liability
relationships would offer the perfect opportunity to increase the cross-sell intensity. On
the other hand, acquisition of 12.8% of impaired loans and increased risk concentration
would have to be managed. KMB and YES could also face a cost implication as the ratio
of their staff costs per employee is 36%/28% higher than that for AXSB.
 Profitability impact and dilution in promoter shareholding: AXSB’s 9MFY17 RoA of 0.6%
and RoE of 6.1% are significantly lower than those for other private banks. The financial JM Financial Research is also available on:
performance in FY18E would still remain weak, despite expectations of a recovery. A Bloomberg - JMFR <GO>,
merger would therefore dilute the performance metrics of other private banks Thomson Publisher & Reuters
substantially over FY18E-19E at least. Integration challenges would probably keep S&P Capital IQ and FactSet
financial performance weaker for longer. Another challenge is the sharp dilution in
Please see Appendix I at the end of this
promoter shareholding of KMB, IIB and YES. While the dilution would be welcome for report for Important Disclosures and
KMB, IIB or YES would have to contend with steep dilution in shareholding. Disclaimers and Research Analyst
Certification.
JM Financial Institutional Securities Limited

Banking sector 27 February 2017
Contents
Analysing the fit, bank-wise ...........................................................................6
HDFCB – More challenges than benefits ( X ) .................................................... 6
ICICIBC – No meaningful gain from acquisition ( X ) .......................................... 6
KMB – Several synergies would come into play, but challenges too ( ) ....... 6
IIB – Complementarities exist, could be a meaningful acquisition ( ) .......... 7
YES – Big all-round gains, promoter dilution would be an impediment ( ) .. 8

Acquisition of / merger with AXSB – A Quantum Leap for all ...........................9
Leapfrogging 6-7 years into the future .............................................................. 9
Significant complementarities in branch network, products and loans .......... 11
Benefits and challenges of a merger with AXSB ............................................. 16
Synergies to make combined entity a corporate and retail powerhouse ....... 16
CASA ratio would improve substantially, should lead to drop in SA rates ...... 17
Cost impact of merger would make it imperative to rationalize rapidly ......... 18
Non-interest income would become more diversified .................................... 19
Asset quality resolution and recognition ......................................................... 20
Profitability impact, dilution in key metrics................................................... 23
Steep dilution in promoter shareholding would be a disincentive to merge .. 24
Annexures ................................................................................................... 26
JM Financial Institutional Securities Limited Page 2

Exhibit 1. JMFL: Indian Banks valuation matrix

Company Price Mkt Cap P/E (x) P/B (x) RoE Reco Target (`) Upside
($mn) FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Government Banks
BOB 164 5,677 18 11 8 1.0 0.9 0.8 5.6% 8.9% 11.3% HOLD 187 14%
PNB 140 4,454 8 5 9 0.7 0.6 0.7 8.2% 13.7% 8.1% SELL 112 -20%
SBI (Consolidated) 268 32,056 27 18 10 1.1 1.1 1.0 4.2% 5.9% 9.7% BUY 304 13%
SBI (Standalone) 268 32,056 18 11 11 1.3 1.2 1.1 7.9% 11.6% 10.9% BUY 304 13%
New Private Banks
AXSB 509 18,247 23 15 12 2.1 1.9 1.7 9.5% 13.3% 15.0% BUY 530 4%
HDFCB 1,394 53,470 24 21 17 4.2 3.6 3.1 18.7% 19.0% 19.5% BUY 1492 7%
ICICIBC (Consolidated) 279 24,331 15 13 10 1.6 1.5 1.4 11.7% 12.0% 14.3% BUY 328 18%
ICICIBC (Standalone) 279 24,331 16 19 15 1.7 1.6 1.5 11.7% 9.0% 10.5% BUY 328 18%
KMB (Consolidated) 801 22,073 30 27 23 3.9 3.4 2.9 13.7% 13.6% 14.0% HOLD 900 12%
KMB (Standalone) 801 22,073 43 39 32 5.4 4.8 4.2 13.2% 13.1% 13.9% HOLD 900 12%
YES 1,422 9,022 21 16 11 3.0 2.6 2.5 17.9% 17.1% 24.7% BUY 1610 13%
IIB 1,319 11,825 27 22 17 4.0 3.4 2.9 15.9% 16.9% 18.5% BUY 1572 19%
Source: JM Financial; Prices as of Feb 27th, 2017
Exhibit 2. JMFL: Indian Banks/Financials valuation matrix

Company BVPS Adj. BVPS EPS EPS Growth
FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E FY17E FY18E FY19E
Public Sector Banks
BOB 164 178 197 83 118 146 9 15 21 -138% 70% 40%
PNB 213 233 203 29 65 84 16 29 16 97% 78% -46%
SBI (Consolidated) 242 255 276 117 145 180 10 15 26 -38% 51% 74%
SBI (Standalone) 203 228 236 147 163 190 15 25 25 19% 61% 0%
New Private Banks
AXSB 239 269 293 190 208 255 22 34 41 -37% 55% 22%
HDFCB 332 383 445 325 374 435 58 68 81 19% 17% 19%
ICICIBC (Consolidated) 171 185 205 144 160 189 19 21 28 10% 11% 31%
ICICIBC (Standalone) 162 174 187 134 150 173 17 15 19 5% -14% 26%
KMB (Consolidated) 208 237 272 208 237 272 27 30 36 41% 13% 18%
KMB (Standalone) 148 168 191 148 168 191 18 21 25 62% 12% 21%
YES 474 541 575 378 455 553 69 87 129 14% 26% 49%
IIB 333 385 449 326 375 439 50 61 77 29% 22% 27%
Source: JM Financial, Prices as of Feb 27 , 2017

th

Exhibit 3. Comparison between banks on a standalone basis (Please refer to relevant Annexures for details of ranking)
HDFCB ICICIBC AXSB KMB IIB YES
Scale Rank (based on Total Assets) 1 2 3 4 6 5
Rural & Semi Urban

Rural penetration of 32.7
48.5 49.3 44.5 41.0 45.6
branches:
51.5 50.7 55.5 59.0 54.4
Urban & Metro 67.3
5.7
North 12.2 8.7 12.3
14.6 13.2 19.6 18.0 5.3
West 30.2 25.1 24.3 28.4
Regional Branch 12.6 13.3 42.0
South 18.3 14.3 13.9
distribution: East & N-East 23.1 21.0 35.0 30.9
21.7 21.0 26.2 16.9 22.3
Central 23.2 26.6
16.0 14.3 15.7 16.2 15.9 11.2

CA
Liabilities profile SA 22.2
50.1 52.4 25.8 21.1
Other deposits 54.6 29.4 31.8 58.0 63.0
35.6 66.7
8.6
Loan book – Retail vs Retail 39.9 37.0 41.7
48.9 46.3
non-Retail Non-Retail
60.1 51.1 53.7 58.3
63.0
91.4
Term loans / total loans

30.7 22.3 29.9 30.6 27.2 25.2
Loan book – Term vs.
Working capital Other loans / total loans
69.3 77.7 70.1 69.4 72.8 74.8
Efficiency Rank (Annex 2) 4 1 2 4 2 4

Productivity Rank (Annex 3) 2 3 1 5 6 4
(GNPA + Restructured (%)
1.2 9.6 7.7 2.1 1.4 1.3
loans) / Total loans
5yr Avg. ROA (%, FY12-16) 1.8 1.6 1.7 2.1 1.7 1.6
5yr Avg.ROE (%, FY12-16) 19.6 12.9 18.2 14.5 18.0 22.8
Tier 1 CAR (%, 3QFY17) 15.3 13.1 12.9 16.2 13.9 12.2
CAR (%, 3QFY17) 17.4 16.5 16.5 17.3 14.5 16.9
Investment banking, Broking, Investment banking, Broking,
Subsidiary overlap Retail brokerage NIL NIL Retail brokerage
AMC, Life Insurance AMC, Life Insurance
Source: RBI, JM Financial; Note: CA = Current Account

Exhibit 4. Comparison between banks on a merged basis (Please refer to relevant Annexures for details of ranking)
HDFCB-AXSB ICICIBC-AXSB KMB-AXSB IIB-AXSB YES-AXSB
Scale Rank (based on Total Assets) 1 1 2 3 2
Rural & Semi Urban

Rural penetration of 48.6 47.3 40.9 43.6 44.7
branches 51.4 52.7
Urban & Metro 59.1 56.4 55.3
North 11.8
14.0 12.6 22.8 14.4 13.0
West 27.8 24.7 25.3 28.3
Regional Branch 14.9 15.4 14.5 15.3
South 17.3
distribution East & N-East 24.1
21.0 22.2 26.8 21.3 21.0
Central 22.3 25.0 21.6 22.3
15.9 14.9 15.9 15.8 14.5

CA
Liabilities profile SA
Other deposits 53.8 30.3 51.2 54.0 30.1 55.0 29.2 56.2 29.3
33.9
38.1 29.9
Loan book – Retail vs Retail 49.3 43.8 42.2
non-Retail Non-Retail 50.7 56.2 57.8 61.9 70.1
Term loans / total loans

30.4 25.6 30.1 29.3 28.8
Loan book – Term vs.
Working capital Other loans / total loans
69.6 74.4 69.9 70.7 71.2
Efficiency Rank (refer Annex 2) 3 1 3 2 3

Productivity Rank (refer Annex 3) 2 3 5 4 1
(GNPA + Restructured (%)
3.8 8.8 5.9 6.2 6.0
loans) / Total loans
5yr Avg. ROA (%, FY12-16) 1.8 1.6 1.8 1.7 1.7
5yr Avg.ROE (%, FY12-16) 18.9 14.6 16.9 18.1 18.9
Tier 1 CAR (%, 3QFY17) 14.2 13.0 14.0 13.1 12.7
CAR (%, 3QFY17) 17.0 16.5 16.7 16.0 16.6
Investment banking, Broking, AMC, Investment banking, Broking, AMC,
Subsidiary overlap Retail brokerage NIL NIL
Life Insurance Life Insurance
Source: RBI, JM Financial;

Analysing the fit, bank-wise
We have analysed in detail, the post-merger scenario for each bank across several parameters
spanning balance sheet and profitability. We have also scored these banks on various
matrices to figure the best fit and the possible reasons for an acquisition. We now discuss,
bank-wise, why each bank would or would not be a suitable fit and try to deduce who would
be the likely aspirants for a merger.
HDFCB – More challenges than benefits ( X )

HDFCB is an unlikely suitor for AXSB since there are minimal benefits of such a merger HDFCB is an unlikely suitor as a
whereas the challenges are enormous. merger would present a great
The benefits are: disruption in the existing business
 The merger would create a significantly larger bank with Rs14tn in total assets, Rs8.4tn in model with no meaningful long
loans and Rs10tn in deposits term benefit except scale
 Marginal improvements in efficiency and productivity metrics with revenue/employee and

CASA/branch improving marginally
Key challenges are:-
 GNPA and restructured loans for HDFCB were 1.2% of its loans whereas for AXSB they
were 7.7% of its loans and 12.8% including SDR, 5-25 refinance, watch-list, etc. as of
3QFY17. HDFCB would be inheriting very concentrated positions in large corporate
accounts which are part of consortia lending and will have to devote huge management
bandwidth on resolution of these loans. Its asset quality position and provisioning
requirement would worsen, capitalization would decline and profitability would decline
substantially.
 HDFCB has traditionally avoided certain types of underwriting, especially in taking

concentrated positions in large corporate. Several fee pools are also consciously avoided
by HDFCB which deems them risky. It would have to run down these loans and reduce
such fee activity after the merger.
 HDFCB’s parent already has a large asset management company (which isn’t a subsidiary
of the bank) and is looking to merge its insurance arm with Max Life where AXSB is a
shareholder. This would present additional complications in case of a deal.
ICICIBC – No meaningful gain from acquisition ( X )

ICICIBC’s key metrics are largely similar to those of AXSBs. Whether it is branch distribution, ICICIBC does not stand to gain
liability profile, loan profile, productivity or efficiency, capitalization, etc., both ICICIBC and anything substantial either; hence it
AXSB compete in similar markets and for similar customer profiles with no large strategic would be an unlikely suitor too
differences in either. Both have a large amount of stressed loan portfolio whereby a
combination would not alter risk concentration meaningfully. We believe the probability of
this combination is even lower than that for HDFCB.
KMB – Several synergies would come into play, but challenges too ( )
KMB would benefit substantially from a merger with AXSB as it would see meaningful jump
in scale, inherit a truly pan-India presence, acquire a large home loan portfolio, SA balances
and reduce promoter shareholding which is a key RBI requirement. The flip side would be the
acquisition of stressed assets which would alter KMBs impaired loan position and
provisioning.
The key benefits from a merger would be:-
 Reduction in promoter shareholding from 33.3% currently to 18.6% after the merger
assuming a swap ratio of 3:5 (3shares of KMB for every 5 shares of AXSB).
 Huge jump in scale where it would become either the largest or second largest private
bank in India in balance sheet metrics, branches and cards business.
 Significant change in liabilities profile with SA ratio increasing c.400bps from the current
position. This would allow KMB to drop differential SA rates to 4%

 Increased branch presence in rural and semi-urban areas and in North, Central, East and
North East India. The combined entity would have among the largest ATM network in
India
 KMB lags AXSB in several productivity metrics like revenue/employee and CASA/employee
which would improve. Adoption of best practices would boost productivity
 Capital utilisation would increase, though not necessarily for quality growth but for
provisioning for stressed corporate. KMB has been overcapitalised which has kept its RoE
subdued. Increased capital utilisation would increase leverage.
The key challenges of the merger would be:- Chances of KMB being an acquirer
 Acquisition of a large stressed asset portfolio (12.8% of AXSB’s loans as of 3QFY17) and are high since there are several
increase in risk concentration obvious gains apart from synergy
benefits. Will the bank be willing to
 Inheritance of loans underwritten differently than how KMB approaches underwriting. digest the stressed loans though?
KMB might look to let certain types of loans run-off, if they do not gel with KMBs
underwriting philosophy. This would be a drag on overall loan growth for 1-2 years after
a merger
 Acquisition of several fee based businesses in debt capital markets, syndication, structured
financing, off-balance sheet financing, etc. which KMB is careful about and which it may
look to discontinue or wind down
 Integration of AXSB’s work-force which is several times larger than KMB’s and is trained
under a separate philosophy than KMB’s
 Declining return ratios which may take 2-3 years to rebuild to present levels
IIB – Complementarities exist, could be a meaningful acquisition ( )

IIB might consider this acquisition as it would move several years ahead in its growth IIB also has several
trajectory and become the second or third largest in various categories. Acquisition of SA complementarities and would
balances, home loan portfolio, deeper share of wallet in fees, etc. would be key aspects to benefit from a merger. It would be
consider. On the other hand, increased risk concentration would need to be dealt with and a beneficial acquisition in the long
would use up capital, management bandwidth and organizational resources. term
Benefits from a merger would be:-
 Large scale with a loan book of Rs4.5tn (third largest), deposits of Rs4.9tn (second
largest) and total balance sheet size of Rs7.5tn (third largest)
 Increased presence in South, East and North-Eastern India in terms of branches and a
large, pan-India ATM network. At 4,256 branches, it would have the third largest branch
strength after HDFCB and ICICIBC
 SA proportion would increase from 21% of deposits to 29% post the merger, an increase
of c.900bps. High CASA ratio would allow IIB to drop its high SA rates to 4%
 Acquisition of a large home loan portfolio which IIB does not have currently would make
the retail loan portfolio more secured and diversified.
 IIB would acquire a large market share in debt syndication, structured finance, foreign
exchange (both retail and corporate), etc. where it already has meaningful presence.
Wider distribution would provide a fillip to third party fees for IIB, increasing the quantum
considerably.
 Productivity of the consolidated entity would improve, best practices can be adopted
Challenges after the merger would be:-
 Concentrated corporate loan portfolio with large proportion of stressed assets,

consortium participation and several large accounts which are undergoing resolution
would now be transferred on IIBs portfolio. Combined ratio of GNPAs and restructured
loans would increase to 6.2% as of 3QFY17 for IIB compared to 1.4% pre-merger.
 Sharp drop in RoA and RoE immediately after the merger. However, AXSB’s PPOP RoA is
still healthy and has not contracted sharply as compared to its own history. From a

medium to long term perspective, IIB would be acquiring a strong revenue generating
business
 The share swap would require a 152% dilution at current market price
YES – Big all-round gains, promoter dilution would be an impediment ( )

YES stands to gain on multiple fronts from a merger. It would be able to scale up and YES has several gains to make, viz.,
diversify its liabilities, branch network and loans, all of which it is looking to build organically. in liabilities, branches, ATM
However, promoter shareholding would get diluted from 21.8% currently to 7.4% if we network, retail assets, etc. However,
consider a share swap at current market prices. From a long term point of view, acquisition of promoter shareholding gets diluted
a large franchise would increase granularity in both assets and liabilities and provide a pan- substantially.
India network which YES can subsequently build upon. Capital position would also be
augmented from current levels.
Benefits of the merger would be:-
 A combination of YES and AXSB would be most beneficial to YES from a liabilities stand-
point. The SA ratio would increase from 22% to 29% for YES, an increase of c.700bps. It
would acquire a large amount of granular deposits from mass market customers and
could also consider dropping differential SA interest rates
 YES’s network of 952 branches has higher concentration in Western and Northern India.
Addition of AXSB’s network would increase branch distribution in the South, East and
North-East part of the country
 YES has just begun building retail assets organically and these form c.9% of total loans as
of 3QFY17. A combined entity would have retail loans at 30% of total loans. YES would
be able to integrate and build upon AXSB’s existing customer base and retail
infrastructure, intensify cross sell and expand its retail market presence. Inorganic growth
would save YES years of effort in building a sizeable retail market share
 Granularity in fee income profile – Higher mix of retail banking fees in AXSB (c.45%)
would complement the lower proportion (20-25%) in YES. YES already has a meaningful
presence in debt capital market, syndication, forex, LC/BG, etc. AXSB’s acquisition would
expand its size and scale meaningfully and help it deepen and widen its share of wallet
with corporate customers.
 Capital position of the combined entity would be augmented. CET 1 position would
increase
Key challenges would be:-
 The promoter shareholding would decline to 7.4% after the merger (assuming swap ratio
of 0.4 shares of YES for each share of AXSB), the dilution required for the share swap at
current market prices would be 199%
 Acquisition of stressed asset position as discussed above
 YES has always underwritten loans with several structures in place such that the loans are
taken out in case of exigencies. It usually does not provide a plain vanilla term loan.
Acquisition of a large term loan portfolio would require management to consolidate the
same, which would be a drag on growth in the near term.

Acquisition of / merger with AXSB – A Quantum Leap for all
The bank that acquires AXSB would rank among the top 3 banks in the country by loans,
deposits, balance sheet, branches, ATM network and number of credit and debit cards and
POS terminals. This would be a quantum shift in the competitive landscape and a chance for
the acquirer to work upon several synergistic and scale benefits in the longer run. Significant
complementarities in terms of branch network, product offerings and customers segments
offer opportunities for accelerated growth in future.
Leapfrogging 6-7 years into the future

The post-acquisition market share in advances would increase to 6.3% for KMB, 5.6% for IIB
and 5.8% for YES as of 3QFY17. The deposits market share would increase to 4.8% for
KMB, 4.5% for IIB and 4.6% for YES. Market share in branches would increase for these
branches to 3.3%, 3.1% and 3% respectively as well. Had these banks grown at 20-25%
CAGR, they would have achieved the same level of advances and deposits after 6-7 years.
Effectively, these banks would leapfrog 6-7 years into the future on an average.
Exhibit 1. Number of years required to reach post merger scale at various rates of growth
Loan book (3QFY17, Rs mn) Loan CAGRs (%)
(Years) Pre-merger Post-merger 15% 20% 25% 30%
KMB 1,578 5,050 8.3 6.4 5.2 4.4
IIB 1,028 4,499 10.6 8.1 6.6 5.6
YES 1,171 4,643 9.9 7.6 6.2 5.3
Source: Company, JM Financial
Exhibit 2. Total advances for top 6 private banks Exhibit 3. Advances market share
6,000 7.0% Total advances market share - 3Q17
Advances - 3Q17 (Rs. bn) 6.2%
4,987 5.7%
6.0%
5,000 4,575
5.0%
4,000 4.3%
3,472
4.0%
3,000
3.0%
2.0%
2,000 1,578 2.0%
1.3% 1.5%
1,028 1,171
1,000 1.0%
0.0%
0 HDFCB ICICIBC AXSB KMB IIB YES
Source: Company, JM Financial Source: Company, JM Financial
Exhibit 4. Total deposits for top 6 private banks Exhibit 5. Deposit market shares
7,000 Market Share in Total Deposits - 3Q17
Total deposits - 3Q17 7.0%
6,347
6,000 5.8%
6.0%
5,000 4,653
5.0%
4.2%
4,000 3,708
4.0% 3.4%
3,000 3.0%
2,000 1,494 2.0%

1,192 1,324 1.4% 1.2%
1.1%
1,000 1.0%
0 0.0%
HDFCB ICICIBC AXSB KMB IIB YES HDFCB ICICIBC AXSB KMB IIB YES

Exhibit 6. Number of employees Exhibit 7. Number of branches

1,00,000 5000 4604
87,555 Employees as on FY16 4469 Branch Network - 2Q17
80,000 74,096 4000

3194
60,000 3000
50,135
40,000 2000
31,039 1420
23,060 1062 952
20,000 15,000 1000
- 0
Exhibit 8. ATM Market share
8% Ma rket Share - ATMs (2Q17)

7.0%
7% 6.6%
5.9%
6%
5%
4%
3%
2%
1.0% 0.9% 0.9%
1%
0%
IIB, KMB and YES are trying to bridge the gap with their larger peers in cards, POS terminals
and mobile banking. This would be a big attraction since this would catapult the acquirer into
a systemically important scale in the payments and merchant transaction space. Building such
an infrastructure organically would require significant investments over a long period of time.
Banks would also have to outpace their larger peers who would have better scale economies
and an early mover advantage in this business. An acquisition-led increase in the volume and
value of payments and mobile transactions would be revenue accretive, improve customer
retention and expand cross-sell opportunities meaningfully.

Exhibit 9. Debit cards Exhibit 10. Debit cards market share (%)
40,000 6%
35,353 Debit Cards - 2Q17 ( in '000) Market Share 2Q17 - Debit Cards
35,000 4.8%
5%
30,000
24,202 4%
25,000 3.3%
20,000 17,243 3%
2.3%
15,000
2%
10,000
4,164 1% 0.6%
5,000 3,018 0.4%
1,344 0.2%
- 0%
Exhibit 11. Credit cards Exhibit 12. Credit cards market share
9,000 8,301 Credit cards - 2Q17 ( in '000) 35%
Ma rket Share 2Q17 - Credit Cards
30.4%
8,000
30%
7,000
25%
6,000
5,000 20%
4,062
14.9%
4,000 15%
2,887 10.6%
3,000
10%
2,000
890 5% 3.3%
1,000 505 1.8%
29 0.1%
- 0%
Exhibit 13. Mobile banking transactions by Value Exhibit 14. Market share in mobile transactions by value
Mobile banking FY16 (Oct '16) - (Rs billions) Mo bile banking market share by Value for FY16 (Oct
220 203.9 20%
18.0% '16)
200 18%
180 16%
153.5 13.5%
160 14%
140
12%
120
10%
100 88.1 7.8%
8%
80
60 6%
40.8 3.6%
40 4%
15.4 1.4%
20 4.9 2% 0.4%
0 0%
Significant complementarities in branch network, products and loans

AXSB acquisition would provide a large delta in the branch penetration and pan-India
distribution of points of presence for most of the mid-sized banks. AXSB’s branches are well-
spread out across regions with slightly higher presence in the Eastern Region where HDFBC
or ICICIBC have relatively lower branch distribution. With an acquisition, regional branch
distribution would become significantly more even for the three mid-sized banks in question.
Each bank would expand their absolute pan-India footprint at one go.

While KMB has only 14.4% of its branches in Central, Eastern and North eastern region
together, AXSB has 31.6% of its branches in these regions as of 2QFY17. The combined
entity will own the largest network of branches in Andhra Pradesh, Gujarat, Karnataka,
Maharashtra, Telangana and West Bengal. It would also have the second largest branch
network in Rajasthan, Punjab, Tamil Nadu and Uttar Pradesh. Also, combined entity will own
highest number of branches by any private bank in Metropolitan and Urban areas. While its
metro presence will get a boost, its lagging network in rural and semi-urban areas will be
scaled up immediately.
Exhibit 15. Bank-wise branch distribution across regions in India for large PVBs
KMB-
Branch mix (%)
HDFCB ICICIBC AXSB KMB IIB YES AXSB IIB-AXSB YES-AXSB
Central Region 14.6% 12.2% 13.2% 8.7% 18.0% 12.3% 11.8% 14.4% 13.0%
Uttar Pradesh 0.7% 0.7% 1.0% 0.6% 0.5% 1.1% 0.9% 0.9% 1.0%
Madhya Pradesh 2.9% 4.7% 3.9% 2.5% 5.9% 5.1% 3.5% 4.4% 4.2%
Chhattisgarh 1.7% 1.3% 1.9% 1.1% 3.0% 0.4% 1.6% 2.2% 1.5%
Uttarakhand 9.4% 5.5% 6.4% 4.6% 8.6% 5.7% 5.9% 6.9% 6.2%
Eastern Region 10.3% 11.0% 15.6% 5.3% 11.1% 3.7% 12.4% 14.5% 12.8%
West Bengal 4.0% 4.9% 7.0% 2.7% 4.2% 2.2% 5.7% 6.3% 5.9%
Odisha 2.9% 2.9% 4.3% 1.1% 3.0% 0.4% 3.3% 4.0% 3.4%
Bihar 2.0% 1.8% 2.5% 0.8% 1.9% 0.3% 2.0% 2.3% 2.0%
Jharkhand 1.3% 1.2% 1.5% 0.5% 1.8% 0.5% 1.2% 1.6% 1.3%
Others 0.2% 0.2% 0.3% 0.1% 0.2% 0.2% 0.2% 0.3% 0.3%
North Eastern Region 2.2% 2.3% 2.8% 0.4% 3.2% 1.6% 2.1% 2.9% 2.5%
Assam 1.2% 1.4% 1.6% 0.3% 2.3% 0.9% 1.2% 1.8% 1.4%
Others 1.0% 0.9% 1.2% 0.1% 0.9% 0.6% 0.9% 1.1% 1.1%
Northern Region 30.2% 25.1% 24.3% 19.6% 28.4% 42.0% 22.8% 25.3% 28.3%
Delhi 5.9% 3.8% 4.2% 7.1% 3.9% 9.0% 5.1% 4.1% 5.3%
Punjab 10.0% 5.3% 9.0% 4.7% 7.8% 9.0% 7.7% 8.7% 9.0%
Rajasthan 3.7% 9.6% 3.7% 3.8% 7.1% 9.3% 3.7% 4.6% 5.0%
Haryana 7.1% 4.3% 5.8% 3.2% 7.7% 12.1% 5.0% 6.3% 7.2%
Others 3.5% 2.0% 1.6% 0.8% 2.0% 2.5% 1.3% 1.7% 1.8%
Southern Region 21.7% 26.2% 23.2% 35.0% 16.9% 13.9% 26.8% 21.6% 21.0%
Karnataka 5.5% 5.9% 6.0% 12.1% 3.1% 6.1% 7.9% 5.3% 6.0%
Andhra Pradesh 2.8% 2.9% 3.5% 8.1% 2.4% 1.3% 4.9% 3.3% 3.0%
Telangana 4.3% 4.0% 3.4% 6.3% 2.8% 1.7% 4.3% 3.3% 3.0%
Tamil Nadu & Puducherry 5.3% 9.7% 7.4% 6.0% 5.7% 3.2% 7.0% 7.0% 6.4%
Kerala 3.7% 3.7% 2.7% 2.4% 2.7% 1.5% 2.6% 2.7% 2.4%
Western Region 21.0% 23.1% 21.0% 30.9% 22.3% 26.6% 24.1% 21.3% 22.3%
Maharashtra 11.3% 15.2% 11.6% 21.4% 12.8% 17.9% 14.6% 11.9% 13.0%
Gujarat 8.0% 7.1% 9.0% 8.9% 8.4% 7.7% 9.0% 8.8% 8.7%
Others 1.6% 0.9% 0.5% 0.6% 1.1% 1.1% 0.5% 0.7% 0.6%
Total no of branches 4,604 4,469 3,194 1,420 1,062 952 4,614 4,256 4,146
On the other hand, IIB would gain market presence in the South – an extremely credit
intensive market – where it has only 17% of its branches as compared to 20-25% for
competitors. Deeper penetration in markets of Karnataka, Andhra Pradesh and Telangana
would provide access to key markets with high credit-deposit ratio. While IIB’s branch
presence would not be the largest in the meaningful states after such merger, it would

definitely be among the top 2-3. Such a merger would also be in sync with IIBs approach of
increasing branch density in key markets.
YES would not only witness a sharp jump in branches, which would increase from 952 to
4146, but its distribution is North-centric and would be substantially more diversified with the
addition of AXSB’s branches with more branch presence in the East and South. This would
also accelerate the build-out of retail assets where it would get a ready platform to build on.
We notice that branch market share with private banks other than the top 6 private banks in
key South Indian states like Andhra Pradesh, Kerala, Tamil Nadu and Karnataka is high. One-
to-one correspondence between credit market share and branch market share cannot be
drawn since corporate loans would be booked at the regional or zonal head-quarters.
However, for retail loans and retail liabilities, one could draw a broad correlation between the
market shares. The large market share with other private banks provides an opportunity for
the large private banks. They could easily compete out regional banks given their lower cost
of funds, wider product suite, premium service and customer-centricity given a focused
approach.
Exhibit 16. State-wise split of branches of Private Banks

Total Private
(% of total private sector branches in Key states) HDFCB ICICIBC AXSB KMB IIB YES Others
Sector branches
Andhra Pradesh 15% 15% 13% 14% 3% 1% 38% 843
Gujarat 25% 22% 19% 9% 6% 5% 14% 1,476
Haryana 32% 18% 18% 4% 8% 11% 9% 1,032
Karnataka 14% 14% 10% 9% 2% 3% 47% 1,837
Kerala 8% 8% 4% 2% 1% 1% 76% 2,116
Maharashtra 19% 25% 13% 11% 5% 6% 21% 2,740
Delhi 27% 17% 13% 10% 4% 8% 21% 1,019
Punjab 35% 18% 22% 5% 6% 7% 7% 1,309
Rajasthan 17% 42% 12% 5% 7% 9% 7% 1,010
Tamil Nadu 8% 15% 8% 3% 2% 1% 63% 2,971
Telangana 23% 21% 13% 11% 4% 2% 27% 845
Uttar Pradesh 35% 20% 16% 5% 7% 4% 12% 1,246
West Bengal 16% 19% 19% 3% 4% 2% 37% 1,160
Total Private Bank branches 19% 19% 13% 6% 4% 4% 33% 23,903
Source: RBI, JM Financial
Higher penetration in Rural and semi-urban markets:

The three large private banks, viz., HDFCB, ICICIBC, AXSB, have largely well-distributed
branch presence across metro, urban, semi-urban and rural centres. However, the mid-sized
banks viz., KMB, IIB and YES are relatively unevenly spread with KMB and IIB having lower
percentage of branches in semi-urban centres as compared to YES.
Acquisition of AXSB would be most beneficial for rural and semi-urban penetration for KMB
and IIB. KMB has been a metro and urban focused bank. AXSB’s presence in rural and semi-
urban markets (combined 44%) will increase the combined branch presence to 40% for KMB
from 32% of its branches currently.
For IIB, the share of branches in rural and semi-urban centres would improve to 43% from
41% currently but the share in semi-urban centres would increase to 26% from 21%
currently. This would provide IIB access to more SME and MSME customers going ahead.

Exhibit 17. Branch distribution across centres
No of Branches HDFCB ICICI AXSB KMB IIB YES KMB-AXSB IIB-AXSB YES-AXSB
Metropolitan 1335 1323 1016 665 351 323 1681 1367 1339
Urban 900 942 757 291 276 195 1048 1033 952
Semi-urban 1446 1343 903 273 223 294 1176 1126 1197
Rural 923 861 518 191 212 140 709 730 658
Total 4604 4469 3194 1420 1062 952 4614 4256 4146
Mix (%)
Metropolitan 29% 30% 32% 47% 33% 34% 36% 32% 32%
Urban 20% 21% 24% 20% 26% 20% 23% 24% 23%
Semi-urban 31% 30% 28% 19% 21% 31% 25% 26% 29%
Rural 20% 19% 16% 13% 20% 15% 15% 17% 16%
Total 100% 100% 100% 100% 100% 100% 100% 100% 100%
Source: RBI, JM Financial
Customer coverage and product offering:

AXSB had 17mn SA customers as of FY16, which would be added to the customer base of
the acquiring bank. AXSB is particularly strong in mass market retail customers and mid-
corporates borrowers. This would be complementary to KMB and YES’s expertise in high
quality large corporates, HNI and mass affluent segment and SME.
Exhibit 18. Merger will increase the customer coverage for combined entity
AXSB KMB IIB YES
High quality large corporates    
Mid Corporates    
SMEs (including Traders)    
High Net Worth Individuals    
Mass Affluent    
Mass Market    
NRIs    
MNCs    
Source: Company, JM Financial. Note: √ Level of Presence
Complementarities in product offerings will provide significant revenue opportunities for the
merged entity. AXSB’s retail business, investment banking business, international exposure
(KMB has very low presence internationally) complements strong commercial banking (vehicle
finance) business and SME oriented product portfolio of KMB. Acquisition of eING Vysya
provided a wider distribution network for KMB’s insurance and asset management
subsidiaries. Addition of a much larger network will add additional avenues of distribution
and cross-sell.
Exhibit 19. Complementarities in product offering

AXSB KMB IIB YES
Loan Products    
Corporate & Business Banking    
Commercial Banking (CV,CE etc)    
Consumer Finance    
Agriculture/Tractor    
Liability products    
Deposits – CA    
Deposits – SA    
Fee based products    
Fees (FX, Trade)    
Private Banking/ Broking/ IB    
Asset Management/ Insurance    
Source: Company, JM Financial. Note: √ Level of Presence

Acquisition of large secured retail portfolio comes with stressed corporate loan book
Acquisition of AXSB’s loan portfolio would bring a large, high quality and secured retail loan
book but would also have a large proportion of mid and large-corporate loan portfolio (both
domestic and international). The retail loan book would be invaluable for YES which has only
just begun adding mass in retail assets. This would provide a ready pool of loan assets, retail
asset professionals, well-evolved processes, collection infrastructure, etc. On the other hand,
IIB would benefit from a large home loan portfolio which it currently lacks. Building a home
loan portfolio organically would be very challenging, time consuming and would not add to
profitability. Similar benefits would accrue to KMB.
While the addition of the retail portfolio would de-risk the balance sheet, the addition of a
lumpy corporate portfolio with significantly high stressed loans would add to concentration
risks. Especially for KMB and IIB, which have low risk concentration in their respective
corporate lending books and have focused on working capital lending. They might run-down
such portfolios or sell them to ARCs, which would lower overall loan growth, increase
provisions and take up significant management bandwidth in the near to medium term.
Exhibit 20. Loan mix as of 3QFY17 – large retail portfolio to be a key positive
KMB- IIB- YES-
Loan Mix as of 3QFY17 (Rs bn) AXSB KMB IIB YES
AXSB AXSB AXSB
Agri loans 213 165 NA NA 378 213 213
Retail 1,286 847 429 101 2,133 1,715 1,387
Auto loans 150 272 327 NA 422 477 150
Mortgage loans (housing loans + LAP) 837 250 86 NA 1,088 924 837
SBL, PL and CC 179 158 15 NA 337 195 179
Other retail loans 120 0 0 101 120 120 220
SME + Business Banking 429 166 317 138 429 745 567
Large and Mid-corporate (Net) 1,544 482 282 932 2,026 1,827 2,476
Other 84 0 0 84 0 0
Total (Domestic/International included) 3,472 1,578 1,028 1,171 5,050 4,499 4,643
Loan Mix (%)
Agri loans 6% 10% 0% 0% 7% 5% 5%
Retail 37% 54% 42% 9% 42% 38% 30%
Auto loans 4% 17% 32% NA 8% 11% 3%
Mortgage loans (housing loans + LAP) 24% 16% 8% NA 22% 21% 18%
SBL, PL and CC 5% 10% 1% NA 7% 4% 4%
Other retail loans 3% 0% 0% 9% 2% 3% 5%
SME 12% 11% 31% 12% 8% 17% 12%
Large and Mid-corporate (Net) 44% 31% 27% 80% 40% 41% 53%
Other 0% 5% 0% 0% 2% 0% 0%
Total (Domestic/International included) 100% 100% 100% 100% 100% 100% 100%

Benefits and challenges of a merger with AXSB
Synergies to make combined entity a corporate and retail powerhouse
Strong retail franchises of AXSB in both retail loans and deposits would bolster the position
of the acquirer bank. The merged entity would look to rationalize branches and employees,
widen and deepen their corporate relationships, consolidate stressed asset positions and build
upon AXSB’s international lending platform.
 Both KMB and IIB have a large working capital corporate loan portfolio. The corporate
term loan portfolio would change that mix
 YES already has a large portion of term loans to corporate and a sizeable corporate bond
portfolio. Addition of AXSB’s portfolios would increase concentration risks. YES would
have to run-down several exposures to reduce such risk.
 Deeper corporate relationships would allow the acquirer to widen its share of wallet with
large and mid-corporates
 KMB has a large equity capital market and advisory team already. It would have to merge
the two teams and rationalise the work-force. Revenue synergies could be derived from
mutually exclusive corporate relationships of the two teams.
 IIB, YES and AXSB have large debt capital market and advisory teams which would
present the opportunity for rationalisation. However, IIB and YES do not have significant
present in equity capital markets which could be bolstered by the acquisition.
 With a significantly larger base of liability customers, the acquirer would try to intensify
cross-sell of loan and fee-based products to the new customers. Cross-sell of broking,
asset management and life and general insurance products would expand. The cross-sell
opportunity would be particularly useful for KMB which has its own insurance and asset
management subsidiaries.
 Rationalisation of branches, employees and IT infrastructure would lead to a reduction in

the cost/income ratio over time
 All three banks would benefit from the large international presence of AXSB
Exhibit 21. Revenue per branch to improve after the merger Exhibit 22. Productivity of the workforce would also improve
Revenue per branch (ex-rural branches) (Rs. Mn) - FY16 Revenue per employee (Rs. Mn) - FY16
110 105 6.0
106 103 104 5.1
100 5.2 4.9
5.0 4.5 4.6
100 96 96 4.4 4.4
92
4.0 3.4
90 3.1
3.0
80 78
2.0
70 1.0
60 0.0
AXSB
IIB
KMB
HDFCB
YES
KMB-AXSB
ICICIBC
YES-AXSB
IIB-AXSB
AXSB
IIB
HDFCB
KMB
KMB-AXSB
YES
ICICIBC
YES-AXSB
IIB-AXSB

Exhibit 23. Profit per branch would increase Exhibit 24. Profit per employee would increase substantially
PAT per branch (ex-rural branches) (Rs. Mn) - FY16 Profit per employee (Rs. Mn) - FY16
40 2.0
34 35 34 1.7
33 32 1.6 1.7
28 28 1.4 1.4
30 27 1.5 1.3 1.3
1.0
20 17 1.0
0.7
10 0.5
0 0.0
AXSB
IIB
HDFCB
KMB
KMB-AXSB
YES
ICICIBC
YES-AXSB
IIB-AXSB
AXSB
IIB
KMB-AXSB
IIB-AXSB
HDFCB
KMB
YES
ICICIBC
YES-AXSB
CASA ratio would improve substantially, should lead to drop in SA rates

CASA ratio of AXSB (48% as of 3QFY17) is higher than that of KMB (42%), IIB (37%) and
YES (33%). These ratios are overstated by at least 2% as these pertain to post
demonetization phase. Some of the SA inflows from 3QFY17 would flow out and move
towards investment products or term deposits. A normalized CASA ratio would be 2-3%
below 3QFY17 levels.
IIB, KMB and AXSB have similar current account (CA) ratios due to their strong corporate
franchisee; however, their CA ratios differ. KMB (26% SA ratio), IIB (21%) and YES (22%)
offer differential rates on savings deposits while AXSB offers 4% on SA balances. A
combination would increase the CASA proportion to 46% for KMB, 45% for IIB and 44% for
YES. With some outflows expected, we believe the true CASA ratios would settle 2-3% lower
than these proportions. However, that would large put the SA gathering drive in these three
banks at ease. Having achieved a critical scale of CASA, the acquirer would moderate its SA
rates to 4% as offered by the larger peers today. This would lead to higher margins.
Exhibit 25. CASA ratios would improve substantially Exhibit 26. CASA market shares
CA % (3Q17) SA % (3Q17) 8% 7.5% CASA deposits 3Q17 - Market Share
60%
45% 50% 46% 45% 7%
50% 48% 42% 44%
6.0%
37% 6%
40% 33%
36% 5% 4.6%
30% 29% 32% 30% 29%
26% 29%
21%
22% 4%
20%
3%
10% 16%
16% 14% 16% 16% 16% 16% 15%
11% 1.6%
2%
0% 1.2% 1.1%
IIB
AXSB
KMB-AXSB
HDFCB
KMB
YES
ICICIBC
YES-AXSB
IIB-AXSB
1%
0%
We believe the acquirer would drop their SA rates to 4% post-merger. Differential SA rates
were a method to substantially increase the SA proportion, attract high quality deposits and
use them for ALM, cross-sell, etc. With augmentation in SA proportions to c.30%, the banks
would drop their differential rates as they would have critical mass of SA deposits. Further,
maintaining differential rates would have a disproportionate impact on margins since AXSB’s
SA ratio is larger than their own SA ratios. For example, should KMB increase the SA rate on
the AXSB portfolio, its NIM would drop by 25bps. If it drops the SA rate on its own book, its
NIMs would rise by 8bps.

Exhibit 27. Margin impact from change in SA rates – 9MFY17 annualised (%)
(%) Yield on funds (%) Cost of funds (%) NIM (%)
AXSB 8.7 5.6 3.5
KMB 9.6 6.0 4.3
IIB 9.9 6.5 4.2
YES 9.6 6.7 3.4
KMB - AXSB 9.0 5.7 3.7
- With 5.5% SA interest outgo 6.0 3.5
IIB-AXSB 9.0 5.8 3.6
YES-AXSB 8.9 5.9 3.5

Source: Company, JM Financial; NIM = Net interest income/average interest earnings assets; Yield on funds= interest income/average
interest earning assets, Cost of funds = interest expense/average interest bearing liabilities
Cost impact of merger would make it imperative to rationalize rapidly

Difference in employee remuneration would have to be resolved after the merger. This would
require an increase in salaries of the staff from AXSB. Redundancies in the senior and mid-
management level and branch staff would increase. This could lead to an increase in attrition.
For instance, KMB’s staff cost per employee at Rs0.9mn is 36% higher than the same for
AXSB which is Rs0.67mn. YES, too, has high staff cost per employee of Rs0.86mn. Post a
merger, it will be difficult to reduce overall salary levels but it will be imperative to increase
the salaries of AXSB to bring parity. This could lead to an increase in staff costs.
A simplistic analysis would indicate that to bring the 50,135 employees at AXSB at par, KMB
would have an additional staff expense of Rs11.7bn and YES of Rs9.6bn. However,
significant difference in pay would probably be due to large retail network and lower paid
branch staff at AXSB and the difference in salaries at head offices and zonal offices may not
be as large. The final wage bill impact would be much lower, but it would still be meaningful
on a combined basis.
In IIB’s case, given the large number of branch staff in vehicle finance, the staff expense per
employee is lower than that of AXSB. In this case, it would have to perhaps increase salaries
of its own staff by Rs3.2bn or lower. A merger would, therefore, have the least impact on IIB
from a staff cost point of view.
Branch overheads would probably be easier to rationalize as closures or merger of
overlapping branches, relocation of branches, etc. would be undertaken over the years
following a merger to reduce costs.

Exhibit 28. Cost/income: pre- and post-merger (9MFY17) Exhibit 29. Cost to assets: pre- and post-merger (9MFY17)
70 6
61.2 Cost/income Cost/assets
5.0
60 5
47.3 48.7
50 44.0
41.0 40.1 41.2 41.9 40.4 4
40 3.1 3.0
3 2.5
30 2.3
2.0 2.1 2.1 2.1
2
20
10 1
0 0
IIB-AXSB
IIB
ICICBC
AXSB
AXSB
ICICBC
KMB-
AXSB
IIB
AXSB
HDFCB
HDFCB
(Cons)
YES
(Cons)
YES
KMB-
IIB-AXSB
AXSB
AXSB
YES-
YES-
KMB
KMB
Exhibit 30. Gap between AXSB, KMB and YES is large Exhibit 31. Some cost rationalisation opportunities will arise
Staff costs per employee - FY16 (Rs. Mn) O ther opex per branch- FY16 (Rs. Mn)
1.0 30.0
0.9 24.6 23.7
0.9 0.9 25.0 22.8
0.8 22.5 21.3 21.8
0.8 0.7
0.7 0.7 18.7 19.5
0.7 0.7 0.6 20.0 17.3
0.6 0.5
15.0
0.5
0.4 10.0
0.3
0.2 5.0
0.1 0.0
-
ICICIBC
HDFCB
AXSB
IIB
IIB-AXSB
YES
YES-AXSB
KMB
KMB-AXSB
IIB
AXSB
KMB-AXSB
HDFCB
KMB
YES
ICICIBC
IIB-AXSB
YES-AXSB
Non-interest income would become more diversified

AXSB has had among the most diversified fee based businesses as compared to peer banks.
Its retail banking fees comprise 40-42% while the rest of the fees comprise of corporate
banking (c.25%), business banking, SME and treasury. Strength in retail distribution and
cross sell is the key drivers of high retail banking fees. Acquisition of AXSB would provide
significant thrust to retail fees at the acquiring bank. Of the three banks under question, the
fee/assets ratio of KMB is the lowest at 0.9% as of FY16. KMB consciously avoids fees which
require aggression in several products like structured finance, derivatives, M&A, off-balance
sheet funding, etc. which the management believes create undue risk. KMB will therefore
have to re-evaluate that strategy or shrink the size of such fees at AXSB. Thus, despite the
initial thrust in corporate fee, KMB would have to decide on the direction of the ‘riskier’ fee
variety. The decision may lead to a moderation in contribution of corporate fee income.
The fee income aspect will be much simpler to integrate for IIB or YES which are also
aggressive participants in such corporate fee activity. Additionally, the acquisition would
diversify fee income substantially for YES where retail fees currently contribute 20-25% of
overall fees. In the case of IIB, the contribution of retail fee would already be high. Further, IIB
derives a large amount of its fees from off-balance sheet funding, structured products, debt
capital markets, advisory, etc. These fee incomes would be similar in AXSB as well. A
combination of these departments would allow IIB to widen its customer profile and deepen
relationships and share of wallet too.

Exhibit 32. CEB per branch (ex-rural) – FY16 Exhibit 33. Fee / assets (%) – FY16
CEB income per branch (ex rural) - (Rs. Mn) Fee to assets %
40 2.0%
34 1.6%
29 1.6% 1.5%
30 27 27 1.3% 1.3%
27 1.3% 1.2%
23 1.1%
21 21 1.2% 1.0%
0.9%
20
14 0.8%
10
0.4%
0 0.0%
IIB
AXSB
KMB-AXSB
HDFCB
KMB
YES
ICICIBC
YES-AXSB
IIB-AXSB
AXSB
IIB
YES
HDFCB
KMB
KMB-AXSB
ICICIBC
YES-AXSB
IIB-AXSB
Asset quality resolution and recognition

The biggest challenge of the merger would perhaps be the import of a concentrated and
stressed large corporate portfolio from AXSB. As of 3QFY17, the overall impaired loan
portfolio of AXSB was 12.8% of loans while the GNPA and standard restructured loans
added up to 7.5%. The remaining pertained to the watch-list, an outstanding amount of
Rs127bn as of 3QFY17 and the amounts under SDR, 5-25 refinance, S4A, etc. Further, the
non-watchlist slippages have risen to 3% of the 12-month lagged wholesale loans or 1.4%
of the 12-month lagged total loans as of 3QFY17. Acquisition of AXSB would require the
acquirer to deal with these portfolios.
KMB has historically been cautious about under-writing and focused on high quality, low risk
exposures. It has also been aggressive about stressed asset recognition and provisioning.
Should it acquire AXSB, it would need to not only deal with loans that are already stressed
but would also have to decide which loans, especially from the watch-list of AXSB, would
need to be declared non-performing based on its own risk framework. This could lead to a
jump in GNPAs and correspondingly, an increase in provisions.
IIB and YES would also see a marked deterioration in their overall stressed asset positions and
YES would have a 9% reduction in its provision coverage ratio. YES had stayed out of
consortium lending consciously and would now be saddled with several loans where it would
be a consortium leader. IIB has so far kept its focus on retail and SME and has not built large
corporate exposures aggressively. It would have to decide a course of action for the large
corporate exposures as well.

Exhibit 34. AXSB Bank: Movement of top 10 sectors in the watchlist
Sector 4Q16 Mix (%) 1Q17 Mix (%) 2Q17 Mix (%) 3Q17 Mix (%)
Iron and Steel 54.3 24% 52.8 26% 16.5 12% 16.6 15%
Power 52.0 23% 54.8 27% 56.5 41% 54.3 49%
Textiles 15.8 7% 14.2 7% na na na na
Services 13.6 6% na na na na na na
Oil and Gas 13.6 6% 12.2 6% 17.9 13% 6.7 6%
Mining 11.3 5% 6.1 3% na na na na
Infra & Construction 11.3 5% 12.2 6% 11.0 8% 8.9 8%
CRE 9.1 4% 8.1 4% 2.8 2% na na
Cement 9.1 4% 6.1 3% 6.9 5% 6.7 6%
Shipping 6.8 3% 6.1 3% 4.1 3% 2.2 2%
Industrials na na 6.1 3% na na 1.1 1%
Other 29.4 13% 30.4 15% 22.1 16% 14.4 13%
Total fun based exposure (FB) 226.3 100% 203.0 100% 137.9 100% 110.9 100%
ADD: Non- Fund Based Exposures (NFB) 26.3 25.6 19.0 16.2
Total Exposure (FB+NFB) 252.5 228.6 156.9 127.1
Reduction in Funded Watchlist na 10.3% 39.0% 51.0%
Reduction in Total Watchlist na 9.5% 38.0% 49.7%

Exhibit 35. AXSB: Increase in non-WL slippages

1Q17 2Q17 3Q17
Gross slippages 36,380 87,720 45,600

Of which,
Corporate book - Watchlist 26,800 72,880 25,790
Corporate book - Outside watchlist 2,310 9,050 11,053
As a % of Total loan book 0.3% 1.2% 1.4%

As a % of Wholesale loan book 0.7% 2.6% 3.0%
Exhibit 36. Combined asset quality for acquiring bank - (3QFY17) Exhibit 37. Provision coverage ratio post acquisition - (3QFY17)
GNPA (%) Restructured (%) 80%
10%
1.4% 70.1%
8% 70%
66.0%
1.8%
6% 59.8%
1.2% 1.5% 1.4% 59.5% 58.8% 59.1% 59.4%
60% 56.6%
4% 7.9%
0.1%
5.7%
4.7% 4.8% 4.6% 50%
2% 0.1% 47.3%
0.4% 0.4%
2.4%
1.0% 0.9% 0.9%
0%
40%
AXSB
IIB
KMB
HDFCB
KMB-AXSB
YES
ICICIBC
YES-AXSB
IIB-AXSB
ICICIBC
HDFCB
KMB
YES
AXSB
IIB
AXSB
AXSB
IIB-AXSB
KMB-
YES-

Exhibit 38. LLP (9MFY17 annualised %) Exhibit 39. Slippages for 9MFY17
6.0% 9.0%
7.2% 7.2%
4.7% 7.5%
4.5% 6.0% 5.9%
3.8% 6.0% 5.3%
4.5%
3.0%
2.3% 2.2%
2.1% 3.0%
1.5% 1.1% 1.3%

1.5% 0.9%
0.6% 0.6%
0.5% 0.4%
0.0%
0.0%
YES
ICICIBC
KMB
YES-AXSB
IIB
AXSB
AXSB
IIB-AXSB
KMB-
HDFCB
YES
ICICIBC
KMB
IIB
AXSB
AXSB
AXSB
AXSB
KMB-
YES-
IIB-
Source: Company, JM Financial Note: LLP for KMB is for the consolidated entity. Source: Company, JM Financial; Slippages for KMB are for the consolidated entity
Exhibit 40. Overall impaired loans as of 3QFY17 Exhibit 41. Trend in Non-watch-list slippages
GNPA (%) Restructured (%) Other impaired (%) Annualised Slippage as a % of Non retail/agri Loan book
15% 4.0%
12.8% 1Q17 2Q17 3Q17
12% 3.5%
10.3% 10.0% 3.1% 3.1%
9.3% 9.6%
3.0%
9% 2.6% 2.7%
2.4%
2.5%
6%
2.0%
2.5% 1.3% 1.3%
3% 1.5% 1.1%
1.1% 1.4% 1.3%
0.9%
1.0%
0%
AXSB
IIB
KMB-AXSB
HDFCB
KMB
YES
ICICIBC
IIB-AXSB
YES-AXSB
0.5%
0.0%
ICICI AXIS SBI

Profitability impact, dilution in key metrics
The impact on profitability simply due to the merger would be severe on all three banks
being analysed here. However, we should observe that AXSB’s franchise generates significant
core operating profitability as seen from its PPP/average assets (PPoP RoA). Despite a
meaningful decline in RoA, AXSB’s PPoP ROA is at par with private peers. As compared to its
historical record too, the PPoP RoA has not compressed meaningfully, even while bearing the
brunt of interest reversals in 9MFY17. In the medium to long term, an acquirer would have
added a balance sheet with sustainably healthy core profitability.
Key impact of the merger on various operating parameters would be as follows:-
 Margins would compress for KMB and IIB as discussed earlier due to the addition of low
yielding corporate and home loan portfolio. A drop in SA rates after the merger would
add to margins while no change in SA rates of the acquirer would lead to a compression
in margins. The probability of a drop in SA rates is high.
 Staff expenses would be affected since the staff cost per employee is 36% higher for
KMB and 28% higher for YES as compared to AXSB. KMB/YES will have to bring parity in
the pay structure of both organisations. As discussed earlier, the difference could also be
due to the large number of staff at branches and field officers whose pay would be
relatively lower. Hence the total impact of merger on salary costs may be lesser than
calculated earlier. IIB’s staff expenses per employee are 20% lower than AXSB’s. We
believe it will have to increase salary payouts. The absolute impact for IIB would be much
lower than for KMB or YES in our view.
 Provision coverage for the three banks being analysed would be c.60% after a merger.
However, incremental loan loss provisions would increase in FY18E/19E for KMB, IIB and
YES. We currently estimate credit costs of 45bps each for KMB, 62bps each for IIB and
60bps each for YES for FY18E/19E while our estimate for AXSB is 170bps/130bps
respectively.
Exhibit 42. Du Pont (9MFY17)

(% of Avg. assets) AXSB KMB (C) IIB YES KMB-AXSB IIB-AXSB YES-AXSB
Interest Income 8.1 9.0 9.2 9.0 8.4 8.3 8.3
Interest Expense 4.9 4.7 5.3 5.8 4.8 5.0 5.1
NII 3.2 4.3 3.9 3.1 3.6 3.4 3.2
Core Non-interest income 1.4 1.6 2.2 1.8 1.5 1.6 1.5
Non-interest income 2.1 3.9 2.6 2.1 2.7 2.2 2.1
Total income 5.4 8.2 6.5 5.2 6.2 5.6 5.3
Employee cost 0.7 1.6 1.0 1.0 1.0 0.8 0.8
Other Opex 1.4 3.4 2.1 1.2 2.1 1.6 1.4
Operating costs 2.1 5.0 3.1 2.1 3.0 2.3 2.1
PPP 3.2 3.2 3.4 3.1 3.2 3.3 3.2
Provisions 2.3 0.3 0.6 0.4 1.7 1.9 1.8
PBT 0.9 2.8 2.8 2.7 1.5 1.3 1.3
ROA 0.6 1.9 1.9 1.8 1.0 0.9 0.9
ROE (avg. equity) 6.1 13.4 15.0 21.5 9.0 8.4 9.4
Exhibit 43. Du Pont analysis (FY18)

AXSB KMB (C) IIB YES KMB-AXSB IIB-AXSB YES-AXSB
Interest Income 7.8 8.2 8.9 9.1 7.9 8.1 8.1
Interest Expense 4.7 4.2 5.1 5.7 4.6 4.8 5.0
NII 3.1 4.0 3.9 3.4 3.4 3.3 3.2
Core Non-interest income 1.4 3.3 2.4 1.8 2.0 1.6 1.5
Non-interest income 1.8 3.9 2.6 2.0 2.4 1.9 1.8
Total income 4.8 7.9 6.5 5.4 5.8 5.2 5.0
Employee cost 0.7 1.5 1.0 0.9 0.9 0.8 0.7
Other Opex 1.4 3.3 2.2 1.2 2.0 1.6 1.4
Operating costs 2.1 4.9 3.1 2.1 3.0 2.3 2.1
PPP 2.7 3.0 3.3 3.3 2.8 2.9 2.9
Provisions 1.2 0.3 0.5 0.5 0.9 1.0 1.0
PBT 1.6 2.7 2.8 2.8 1.9 1.8 1.9
ROA 1.0 1.8 1.8 1.8 1.3 1.2 1.2
ROE (avg. equity) 11.9 13.6 17.1 23.3 12.6 13.3 14.6

Steep dilution in promoter shareholding would be a disincentive to merge
At current market prices, each of the banks being analysed would have to dilute their existing
shareholders tremendously to acquire AXSB. However, dilution would be the most for YES at
199%, for IIB it would be 152% and for KMB it would be 81% (assuming no premium to
current market capitalization).
Acquisition of AXSB would be most beneficial to KMB. KMB’s promoter shareholding would
be diluted from 33.3% currently to 18.6% post-merger (assuming a swap ratio of 0.6 shares
of KMB for every share of AXSB). As per RBI directive, KMB needs to reduce its promoter
shareholding to less than 30% by 30 June 2017, to less than 20% by 31 December 2018 and
less than 15% by 31 March 2020. The merger would provide KMB three years to comply
with the 2020 deadline while making it compliant with the first two.
For IIB as well, the promoter shareholding would decline from 15% as of 3QFY17 to 6.1%
after the merger. The dilution required would be much higher as compared to that for KMB
at 152%.
Exhibit 44. Shareholding of KMB and combined shareholding
Other, 9.6%
Kotak Other, Axis Other, Uday
KMB-AXSB
11.6% LIC, 14.5%
10.5% Kotak,
DII, 8.5% Uday Kotak, DII, ING
DII, 12.2% 18.6%
33.3% SUUTI, 10.1% Mauritius
12.0%
LIC, , 2.2%
6.4%
SUUTI,
ING 5.3%
Mauritius,
FII, 44.8% 3.9%
FII, 49.7%
FII,
46.9%
Source: JM Financial
Exhibit 45. Change in IIB’s shareholding after a merger with AXSB
DII, Other, IIB DII, IIB-AXSB

16.9%
23.6% 6.5%
Other,
Promoter
9.5% Promoter
s, 15.0%
s, 6.1%
LIC,
FII, 8.6%
51.8% SUUTI,
FII, 7.1%
54.9%
Exhibit 46. Change in YES’ shareholding after a merger with AXSB
DII, Other,
YES Bank DII, YES-AXSB
26.4% 17.1%
9.3% Other,
10.8%
Promoter
Promoter s, 7.4%
s, 21.8%
LIC,
FII, 9.6%
FII, 47.2% SUUTI,
42.5% 7.9%

The dilution, however, would be the most for YES as mentioned above. Promoter
shareholding in this case would dwindle to 7.4% after the merger as compared to 21.8%
currently. Given there are two large promoters in YES with similar shareholding, each would
own roughly half the shares. This, we believe, is a major disincentive for YES to acquire AXSB.
Exhibit 47. Share swap ratio and dilution in case of the merger
KMB IIB YES
Outstanding Shares of acquirer bank (mn) 1,841 597 423
Share price (Rs/share) 801 1,319 1,422
Market Capitalisation (Rs mn) 14,74,641 7,88,002 6,01,475
O/s Shares of AXSB Bank (mn) 2349 2349 2349
Share price of AXSB Bank (Rs/share) 509 509 509
Market cap of AXSB Bank (Rs mn) 11,95,641 11,95,641 11,95,641
Premium to market cap of AXSB (%) 0% 0% 0%
Shares to be received by AXSB shareholders (mn) 1,492.7 906.5 840.8

Swap ratio (No. of shares received for each share of AXSB) (x) 0.6 0.4 0.4
Dilution (%) 81 152 199
Exhibit 48. Valuation (Pre and post merger) at CMP

KMB- IIB- YES-
AXSB KMB (Cons) IIB YES
AXSB AXSB AXSB
EPS - 9MFY17 13.9 25.6 47.2 76.2 24.0 40.5 51.4
EPS - FY18E 29.6 30.1 60.9 100.1 37.5 70.4 88.5
BVPS - FY18E 261.9 236.3 382.4 469.0 315.0 560.9 643.7
Current Market Price 509.0 801.0 1,319.0 1,422.0 801.0 1,319.0 1,422.0
Market Capitalisation
1,195.6 1,474.6 788.0 601.5 2,670.3 1,983.6 1,797.1
(Rs bn)
P/E (FY18E) 17.2 26.6 21.7 14.2 21.4 18.7 16.1
P/BVPS (FY18E) 1.9 3.4 3.4 3.0 2.5 2.4 2.2

Annexures
Annexure 1. Ranking for Scale
3Q17 (Rs. Bn) Relative position in the industry today Rank as compared with remaining banks
HDFCB- ICICIBC-
HDFCB ICICIBC AXSB KMB IIB YES KMB-AXSB IIB-AXSB YES-AXSB
AXSB AXSB
Total Assets 8,280 7,578 5,788 2,018 1,671 1,948 14,068 13,366 7,805 7,459 7,736
- Rank 1 2 3 4 6 5 1 1 2 3 2
Loans 4,950 4,575 3,472 1,578 1,028 1,171 8,422 8,046 5,050 4,499 4,643
- Rank 1 2 3 4 6 5 1 1 1 3 2
Deposits 6,347 4,653 3,708 1,494 1,192 1,324 10,055 8,361 5,201 4,900 5,032
- Rank 1 2 3 4 6 5 1 1 2 2 3
How to read the table: The banks are ranked on total assets, loans and deposits individually.
Then we compare each of the merged entities with the remaining banks. The rank denotes
the relative position for each merged entity as compared to the remaining banks. For
rd
example, IIB-AXSB would be ranked 3 in the industry by total assets and loans but would be
nd
ranked 2 in the industry by deposits as compared to ICICIBC, HDFCB, KMB and YES.
Annexure 2. Ranking and Score for Efficiency

HDFCB- ICICIBC- KMB-
FY16 (Rs. mn) HDFCB ICICIBC AXSB KMB IIB YES IIB-AXSB YES-AXSB
AXSB AXSB AXSB
Staff cost/ Employee 0.65 0.68 0.67 0.91 0.54 0.86 0.66 0.67 0.76 0.63 0.72
Rank 2 2 2 6 1 5 2 2 5 1 4
Other Opex/Branch 24.6 17.3 22.5 18.7 23.7 19.5 23.8 19.4 21.3 22.8 21.8
Rank 6 1 4 2 5 3 5 1 2 4 3
Score 8 3 6 8 6 8 7 3 7 5 7
Composite Rank 4 1 2 4 2 4 3 1 3 2 3
How to read the table: The banks are compared on two efficiency parameters above and are
then ranked. For example, IIB with staff cost/employee of Rs0.54mn is ranked one since this is
the lowest among peers. HDFCB has higher other operating expense per branch ratio and is
th
hence ranked 6 . The score is a sum of the ranks. ICIICBC has the lowest score and is hence
nd
ranked 1, AXSB and IIB have the same scores and are ranked 2 . While analysing which will
be the best merger in terms of efficiency, an ICICIBC-AXSB combine would rank the best
followed by IIB-AXSB.
Annexure 3. Ranking and Score for Productivity

HDFCB- ICICIBC- KMB-
FY16 HDFCB ICICIBC AXSB KMB IIB YES IIB-AXSB YES-AXSB
AXSB AXSB AXSB
Reveneue/Employee (Rs mn) 4.4 4.5 5.2 3.1 3.4 4.9 4.7 4.8 4.4 4.6 5.1
Rank 4 3 1 6 5 2 2 2 5 4 1
CASA/Employee (Rs '000) 32.9 31.3 35.2 20.2 19.2 29.4 33.7 32.9 29.5 30.1 33.9
Rank 2 3 1 5 6 4 2 3 5 4 1
CASA/Branch (Rs'000) 407.9 371.6 394.6 272.2 245.1 340.5 402.6 380.9 355.3 356.4 382.5
Rank 1 3 2 5 6 4 1 3 5 4 2
Score 7 9 4 16 17 10 5 8 15 12 4
Composite Rank 2 3 1 5 6 4 2 3 5 4 1
How to read the table: The banks are compared on three productivity parameters above and
then ranked. AXSB with revenue/employee of Rs5.2mn is ranked one since this is the highest
th
among peers. IIB has the lowest CASA/.employee ratio and is hence ranked 6 . The score is a
sum of the ranks. The lowest score is then ranked 1, the next is ranked two and so on. The
‘composite rank’ reveals that AXSB scores the best on productivity parameters while a YES-
AXSB combine would be the best in terms of productivity as compared with other mergers.

APPENDIX I
JM Financial Institutional Securities Limited

Corporate Identity Number: U65192MH1995PLC092522
Member of BSE Ltd. and National Stock Exchange of India Ltd. and Metropolitan Stock Exchange of India Ltd.
SEBI Registration Nos.: BSE - INZ010012532, NSE - INZ230012536 and MSEI - INZ260012539, Research Analyst – INH000000610
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Definition of ratings
Rating Meaning
Buy Total expected returns of more than 15%. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 15% upside from the current market price.
Sell Price expected to move downwards by more than 10%
Research Analyst(s) Certification

The Research Analyst(s), with respect to each issuer and its securities covered by them in this research report, certify that:
All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their
securities; and
No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed
in this research report.
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or a public offering of the securities described herein in Canada or any province or territory thereof. Under no circumstances is this report
to be construed as an offer to sell securities or as a solicitation of an offer to buy securities in any jurisdiction of Canada. Any offer or sale
of the securities described herein in Canada will be made only under an exemption from the requirements to file a prospectus with the
relevant Canadian securities regulators and only by a dealer properly registered under applicable securities laws or, alternatively, pursuant
to an exemption from the registration requirement in the relevant province or territory of Canada in which such offer or sale is made. This
report is not, and under no circumstances is it to be construed as, a prospectus or an offering memorandum. No securities commission or
similar regulatory authority in Canada has reviewed or in any way passed upon these materials, the information contained herein or the
merits of the securities described herein and any representation to the contrary is an offence. If you are located in Canada, this report has
been made available to you based on your representation that you are an “accredited investor” as such term is defined in National
Instrument 45-106 Prospectus Exemptions and a “permitted client” as such term is defined in National Instrument 31-103 Registration
Requirements, Exemptions and Ongoing Registrant Obligations. Under no circumstances is the information contained herein to be
construed as investment advice in any province or territory of Canada nor should it be construed as being tailored to the needs of the
recipient. Canadian recipients are advised that JM Financial Securities, Inc., JM Financial Institutional Securities Limited, their
affiliates and authorized agents are not responsible for, nor do they accept, any liability whatsoever for any direct or consequential loss
arising from any use of this research report or the information contained herein.

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27 February 2017 India | Banking sector | Sector Report

Indian Banking sector

JM Financial Institutional Securities Limited

IIB – Complementarities exist, could be a meaningful acquisition ( ) .......... 7

YES – Big all-round gains, promoter dilution would be an impediment ( ) .. 8

JM Financial Institutional Securities Limited Page 2

Exhibit 1. JMFL: Indian Banks valuation matrix

Source: JM Financial; Prices as of Feb 27th, 2017

Exhibit 2. JMFL: Indian Banks/Financials valuation matrix

BOB 164 178 197 83 118 146 9 15 21 -138% 70% 40%

PNB 213 233 203 29 65 84 16 29 16 97% 78% -46%

New Private Banks

Source: JM Financial, Prices as of Feb 27 , 2017

JM Financial Institutional Securities Limited Page 3

Rural & Semi Urban

16.0 14.3 15.7 16.2 15.9 11.2

Term loans / total loans

Efficiency Rank (Annex 2) 4 1 2 4 2 4

Source: RBI, JM Financial; Note: CA = Current Account

JM Financial Institutional Securities Limited Page 4

Rural & Semi Urban

15.9 14.9 15.9 15.8 14.5

Term loans / total loans

Efficiency Rank (refer Annex 2) 3 1 3 2 3

Source: RBI, JM Financial;

JM Financial Institutional Securities Limited Page 5

HDFCB – More challenges than benefits ( X )

 Marginal improvements in efficiency and productivity metrics with revenue/employee and

Key challenges are:-

 HDFCB has traditionally avoided certain types of underwriting, especially in taking

ICICIBC – No meaningful gain from acquisition ( X )

JM Financial Institutional Securities Limited Page 6

IIB – Complementarities exist, could be a meaningful acquisition ( )

Challenges after the merger would be:-

 Concentrated corporate loan portfolio with large proportion of stressed assets,

JM Financial Institutional Securities Limited Page 7

YES – Big all-round gains, promoter dilution would be an impediment ( )

Key challenges would be:-

 Acquisition of stressed asset position as discussed above

JM Financial Institutional Securities Limited Page 8

Leapfrogging 6-7 years into the future

2,000 1,494 2.0%

Source: Company, JM Financial Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 9

Exhibit 6. Number of employees Exhibit 7. Number of branches

80,000 74,096 4000

Exhibit 8. ATM Market share

8% Ma rket Share - ATMs (2Q17)

JM Financial Institutional Securities Limited Page 10

Significant complementarities in branch network, products and loans

JM Financial Institutional Securities Limited Page 11

JM Financial Institutional Securities Limited Page 12

Exhibit 16. State-wise split of branches of Private Banks

Gujarat 25% 22% 19% 9% 6% 5% 14% 1,476

Haryana 32% 18% 18% 4% 8% 11% 9% 1,032

Karnataka 14% 14% 10% 9% 2% 3% 47% 1,837

Kerala 8% 8% 4% 2% 1% 1% 76% 2,116

Maharashtra 19% 25% 13% 11% 5% 6% 21% 2,740

Delhi 27% 17% 13% 10% 4% 8% 21% 1,019

Punjab 35% 18% 22% 5% 6% 7% 7% 1,309

Rajasthan 17% 42% 12% 5% 7% 9% 7% 1,010

Tamil Nadu 8% 15% 8% 3% 2% 1% 63% 2,971

Telangana 23% 21% 13% 11% 4% 2% 27% 845

Uttar Pradesh 35% 20% 16% 5% 7% 4% 12% 1,246