>IDBI (MORGAN STANLEY)

Research Tactical Idea

We believe the share price will rise relative to the country index over the next 15 days.

This is because the stock has traded off recently, making short term valuation much more compelling. IDBI reports tomorrow and we believe the results will be supported by some improvement in NIM's and also some pickup in fees. One of the issues facing IDBI has been its low NIM's at 0.1-0.2%, but in the current interest rate environment, NIM's could improve, which would have a positive bearing on the stock price, in our view. Moreover, IDBI has corrected by 25% from
the peak on June 29. We expect the stock to pick up some of this return post earnings release.

We estimate that there is about a 70% to 80% or "very likely" probability for the scenario.

Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the scenario.

This is a near term call. Our fundamental 12 month view on the stock remains intact. In the near term, IDBI should benefit from lower rates and higher asset prices. For us to turn more positive, we would need to see a sustainable improvement in NPL's.

Stock Rating: Underweight

Industry View: In-Line