Standard Chartered PLC - IDR

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					                                                                                               Value Pick
                                                                                                 8 July 2011

                                                                                  Time Horizon – 12 Months

Standard Chartered PLC - IDR                      CMP 96                   BUY                     Target 120

                                                  What is IDR? (Indian Depository Receipt)

Key Matrix                                        IDR is an instrument in the form of a Depository Receipt
Price (Rs.)                                  96   created by the Indian depository in India against the underlying
Market Cap (Rs.Crs.)                      2304    equity shares of the issuing company. In an IDR, foreign
52 High / Low (Rs.)                 134.5/85.55   companies would issue shares, to an Indian Depository (say
BSE                                     580001    National Security Depository Limited – NSDL), which would in
NSE                                       STAN    turn issue depository receipts to investors in India. The actual
Shareholding Pattern                              shares underlying the IDRs would be held by an Overseas
Foreign Holding                            85.7   Custodian, which shall authorise the Indian Depository to issue
Instituitons                              12.42   the IDRs. The IDRs would have following features:
Corpoarte holding                          1.89
                                                  ~ IDRs would not be redeemable into underlying equity shares
                                                  before one year from date of issue.
                                                  ~ Such company should also have earned profits in the last 5
                                                  years and should have declared dividend of at least 10% each
                                                  year during this period.
                                                  ~ The pre-issue debt equity ratio of such company should not
                                                  be more than 2:1.
                                                  ~ In addition to other avenues, IDR is an additional investment
                                                  opportunity for Indian investors for overseas investment.

Relative Valuation                                Standard Chartered PLC IDR

Name                           Mkt Cap   P/B      Standard Chartered plc is an international banking group
                                                  operating principally in Asia, Africa and Middle East. The
Average (Industry)             37495.8   1.32     company offers its products and services in the personal,
STANDARD CHARTERED PLC         39203.5   1.62     consumer, corporate, institutional and treasury areas.
CITIGROUP INC                  77586.8   0.73
                                                  The bank came up through IDR route to raise money in India.
BANK OF AMERICA CORP           69300.4   0.52
                                                  This is the only IDR listed in India. The parent company
DEUTSCHE BANK AG-REGISTERED    34212.4   0.76     Standard Chartered Bank after the 2008 fall is the only
BARCLAYS PLC                   30759.8   0.60     company that has survived well and crossed its earlier high. It
Source: Bloomberg                                 has been able to maintain its asset quality and sustain in this
                                                  volatile environment after that also. Consumer banking has
                                                  shown some good growth and cost control where as wholesale
                                                  banking has shown some soft performance. The key drivers
                                                  have been improvement in the segments of wealth
                                                  management, SME, credit card dept and personal loans.

For Private Circulation Only                                                     Anand Rathi Retail Research
                                                                                                                                                                                   Value Pick
                                                                                                                                                                                       8 July 2011

                                                                                                                                                             Time Horizon – 12 Months

                                                                                                    Though in short term the bank is facing hurdles in revenue
                                                                                                    growth but over all, the outlook for the company is good.

                                                                                                    And this positive outlook in performance going forward also
                                                                                                    should be reflected in the share price or IDR in our markets as


                                                                                                    After the SEBI announcement – the stock saw selling pressure
                                                                                                    and sharp correction was seen. Now currently at this level the
                                                                                                    stock looks attractive with good fundamentals and
                                                                                                    performance background and global peer group comparison
                                                                                                    we have a positive outlook for the stock for a price target of
                                                                                                    Rs. 120.


                                                                                                    Regulatory hurdle - SEBI announcing that IDR holders cannot
                                                                                                    convert the instrument into primary equity shares of the foreign
                                                                                                    company after a year, unless the IDR is illiquid. Clarification on
                                                                                                    the same is required.

Peer Group Comparison
Name                                                             Mkt Cap             P/E             ROE           Dvd Yld             P/B            NIM LF         NPA/Total Loans                ROA LF

Average (Industry)                                               37495.8            12.88           9.58              2.97             1.32             2.10                    2.74                   0.68
STANDARD CHARTERED PLC                                           39203.5            13.23           13.22             2.91             1.62             2.27                    1.91                   0.91

CITIGROUP INC                                                    77586.8            13.75            5.69             0.09             0.73             2.93                    2.42                    0.46
BANK OF AMERICA CORP                                             69300.4             9.94            -2.20            0.37             0.52             2.91                    3.39                   -0.20
ROYAL BANK OF SCOTLAND GROUP                                     41996.2                             -1.31            0.00             0.56             1.39                    6.73                   -0.06
DEUTSCHE BANK AG-REGISTERED                                      34212.4            14.02             5.86            1.83             0.76             1.05                    1.76                    0.15
BARCLAYS PLC                                                     30759.8            8.26             7.26             2.42             0.60             1.53                    5.70                    0.25
Source: Bloomberg

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For Private Circulation Only                                                                                                                               Anand Rathi Retail Research

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