9 June 2023 India | Small Finance Banks | Company Update

Ujjivan SFB Small Finance Bank | BUY

Investor and Analyst meet 2023 – Key takeaways

Ujjivan SFB at its Investor & Analyst Meet emphasized on its strategy towards building a mass Sameer Bhise
[email protected] | Tel: (91 22) 66303489
market bank through a) continued focus on underserved customer segments (7.7m
Akshay Jain
customers), b) creating a stable liability franchise with focus on retail deposits c) increasing [email protected] | Tel: (91 22) 66303099
share of secured loans in the portfolio to ~40% and d) further strengthening collection Apurva Deshmukh
efficiency mechanisms to ensure strong asset quality. Incrementally, affordable housing is [email protected] | Tel: (91 22) 66303263
likely to drive the scale of secured loans and the mgmt. intends to scale up the portfolio to
~INR90bn (and additional INR10bn of micro-LAP portfolio) from current levels of INR 34bn.
Recommendation and Price Target
Mgmt is aspiring for an overall asset base growth of >25% in FY24 (with secured book likely
Current Reco. BUY
to cross 30%). With respect to liabilities, Ujjivan SFB is targetting a 35% CASA mix with a Previous Reco. BUY
70% share of retail deposits (along with a 80% CD-ratio) while growing deposits at 30%+ Current Price Target (12M) 38
CAGR over the next 3 years. This is likely to be led by continued multichannel approach, Upside/(Downside) 3.8%
Previous Price Target 38
focus on wide range of customer segments and strengthened analytics. Ujjivan SFB also
Change 0.0%
remains confident on its credit underwriting and collection efficiencies to build a high quality
book with targeted credit costs of <150bps on a steady state basis (and <100bps for FY24). Key Data – UJJIVAN SFBS IN
Overall, mgmt. aspires to deliver 20%+ RoEs FY24 onwards on a steady state basis. We Current Market Price INR37
believe Ujjivan SFB is a key beneficiary of the upswing in the microfinance sector. Incremental Market cap (bn) INR71.5/US$0.9
Free Float 26%
rerating will be contingent on consistent growth and profitability delivery across product
Shares in issue (mn) 1,728.3
segments along with continued improvement in the liabilities franchise. Current valuations at Diluted share (mn)
1.1 FY25e P/BV and 4.7 FY25e P/E are inexpensive given return ratios of 3.2%/26.4% 3-mon avg daily val (mn) INR394.8/US$4.8
RoA/RoE in FY25E. Maintain BUY. 52-week range 38/14
Sensex/Nifty 62,849/18,635
 Targeting a stable and sustainable liability franchise: Ujjivan SFB has exhibited a stellar INR/US$ 82.6
deposit growth of 40% YoY in FY23 this is aided by various initiatives like multi-channel
approach, tailor made products for customers, focus on customer service, cross selling Price Performance
and up selling products. It has a granular deposit base with 53% contribution from retail % 1M 6M 12M
Absolute 27.5 15.3 123.9
individuals, 22% from banks, 14% from corporate and others being 8%. It remains well Relative* 25.3 14.1 97.0
poised to fund its growing asset book with a bucket of various products and expansion in * To the BSE Sensex
customer segment supported by other sources of funding. With respect to liabilities,
Ujjivan SFB is targeting a 35% CASA mix with a 70% share of retail deposits (along with
a 80% CD-ratio) while growing deposits at 30%+ CAGR over the next 3 years.

 MFI industry poised for growth: MFI industry is poised for growth post multiple crisis
faced by the industry with evolving dynamics bringing in disciplined financing which
involves risk based pricing, better risk management, upgraded credit assement and new
RBI regulations on MFI’s. Ujjivan SFB is expected to out pass the industry growth with it
expected to grow between 20-25% in medium term as against the industry which is
expected to grow between 18%-20%. This will be achieved on the back of focussed
customer segment being aspirational middle class, need based product offerings, growing
opportunity in MFI space, learnings from past crisis, independent credit team and 100%
digital underwriting.

 Aiming to increase secure lending via affordable housing route: Ujjivan SFB is looking to

Financial Summary (INR mn)

Y/E March FY21A FY22A FY23E FY24E FY25E
Net Profit 83 -4,228 10,999 12,849 15,312
JM Financial Research is also available on:
Net Profit (YoY) (%) -97.6% -5,195.7% -360.2% 16.8% 19.2%
Bloomberg - JMFR <GO>,
Assets (YoY) (%) 10.7% 15.8% 41.1% 27.5% 25.8%
Thomson Publisher & Reuters,
ROA (%) 0.0% -1.9% 3.9% 3.4% 3.2%
ROE (%) 0.3% -15.3% 33.7% 28.3% 26.4%
S&P Capital IQ, FactSet and Visible Alpha
EPS 0.0 -2.4 5.6 6.6 7.8
EPS (YoY) (%) -97.6% -5,195.7% -330.0% 16.8% 19.2% Please see Appendix I at the end of this
PE (x) 770.7 -15.1 6.6 5.6 4.7 report
S&P Capital
for IQ,Important
FactSet andDisclosures
Visible Alphaand
BV 17 15 20 26 33
BV (YoY) (%) 0.3% -13.9% 36.7% 29.2% 26.9% Please see Appendix I at the end of this
P/BV (x) 2.15 2.50 1.83 1.41 1.11 report for Important Disclosures and
Source: Company data, JM Financial. Note: Valuations as of 08/Jun/2023 Disclaimers and Research Analyst
JM Financial Institutional Securities Limited Certification.
Ujjivan SFB Small Finance Bank 9 June 2023

scale up affordable housing book with change in its strategy. They aim to focus on
customer segment with average ticket size of 10 to 15lakhs located in tier 2-3 cities
offering risk based pricing with state specific policies, customised products to suit local
needs and largely digital processing. It has also introduced housing 2.0 which upgrades its
sourcing channel to multi channel approach along with separate process for credit
underwriting for semi formal and formal segments, multi-product engagement, employee
linked incentives, hub based distribution model that helps in better TAT and increased
productivity. Affordable housing is likely to drive the scale of secured loans and the
mgmt. intends to scale up the portfolio to ~INR90bn (and additional INR10bn of micro-
LAP portfolio) from current levels of INR 34bn. Micro-LAP product aims to bridge the gap
by catering to ticket size of INR 2-10 lakh. Mgmt is aspiring for an overall asset base
growth of >25% in FY24 (with secured book likely to cross 30%).

 Asset quality – sharp improvement, sustainability key: Ujjivan SFB is looking to deliver a
steady performance on asset quality and collection efficiency after a comeback
witnessned post covid with GNPA at 11.8% in Sep21 to 2.6% in Mar23. Mgmt. stated
that this was made possible on the back of stringent credit underwriting policies and
efforts by the collection team. Ujjivan maintains PCR of 98% with floating provision of
INR 2.5bn as of Mar23 that can be utilised for extraordinary circumstances. The SFB has
been able to maintain a collection efficiency of 99%+ for over a year with restructured
portfolio forming less than 1% of total GLP.Mgmt. expects credit cost to be below
150bps on a steady state basis aided by good porfolio quality, continious portfolio
monitoring and strengthening of internal processes and policies.

 Aspiring for sustainable and strong return metrics: The mgmt. highlighted that they are
looking at balanced growth across verticals with rising secured mix and strong asset
quality. They expect to reduce their cost of funds by investing in CA franchise and
maintain opex by investing in various digital intiatives which in turn improves productivity
and expects a ROE of 20%+ over FY24-26.

 Valuation and view: We believe Ujjivan SFB is a key beneficiary of the upswing in the
microfinance sector. Incremental rerating will be contingent on consistent growth and
profitability delivery across product segments along with continued improvement in the
liabilities franchise. Current valuations at 1.1 FY25e P/BV and 4.7 FY25e P/E are
inexpensive given return ratios of 3.2%/26.4% RoA/RoE in FY25E. Maintain BUY.

JM Financial Institutional Securities Limited Page 2

Ujjivan SFB Small Finance Bank 9 June 2023

Financial Tables (Standalone)

Profit & Loss (INR mn) Balance Sheet (INR mn)
Y/E March FY21A FY22A FY23E FY24E FY25E Y/E March FY21A FY22A FY23E FY24E FY25E
Net Interest Income 17,286 17,736 26,979 34,495 42,777 Equity Capital 17,283 17,283 19,547 19,547 19,547
Profit on Investments 559 177 10 500 250 Reserves & Surplus 12,467 8,321 20,032 31,596 45,376
Exchange Income 0 0 0 0 0 Deposits 1,31,358 1,82,922 2,55,377 3,31,990 4,24,947
Fee & Other Income 2,549 2,962 5,882 6,891 8,159 Borrowings 34,473 19,636 28,415 31,056 33,381
Non-Interest Income 3,108 3,139 5,892 7,391 8,409 Other Liabilities 7,786 7,461 9,286 10,215 10,726
Total Income 20,394 20,875 32,871 41,886 51,185 Total Liabilities 2,03,805 2,36,045 3,33,169 4,24,916 5,34,489
Operating Expenses 12,301 14,964 18,021 22,124 27,000 Investments 25,165 41,529 85,103 88,305 1,11,252
Pre-provisioning Profits 8,093 5,911 14,850 19,763 24,185 Net Advances 1,44,940 1,63,032 2,12,897 2,72,709 3,48,303
Loan-Loss Provisions 7,990 11,178 178 2,631 3,769 Cash & Equivalents 25,775 21,681 24,836 28,031 30,664
Provisions on Investments 0 0 0 0 0 Fixed Assets 2,807 2,494 2,829 3,480 4,217
Others Provisions 1 318 0 0 0 Other Assets 5,118 7,309 7,504 32,391 40,052
Total Provisions 7,991 11,497 178 2,631 3,769 Total Assets 2,03,805 2,36,045 3,33,169 4,24,916 5,34,489
PBT 102 -5,586 14,672 17,132 20,416 Source: Company, JM Financial
Tax 19 -1,358 3,673 4,283 5,104
PAT (Pre-Extraordinaries) 83 -4,228 10,999 12,849 15,312
Extra ordinaries (Net of Tax) 0 0 0 0 0
Reported Profits 83 -4,228 10,999 12,849 15,312
Dividend paid 0 0 2,077 1,285 1,531
Retained Profits 83 -4,228 8,922 11,564 13,781
Source: Company, JM Financial

Key Ratios Dupont Analysis

Y/E March FY21A FY22A FY23E FY24E FY25E Y/E March FY21A FY22A FY23E FY24E FY25E
Growth (YoY) (%) 0 0 0 0 0 NII / Assets 8.91% 8.06% 9.48% 9.10% 8.92%
Deposits 21.8% 39.3% 39.6% 30.0% 28.0% Other Income / Assets 1.60% 1.43% 2.07% 1.95% 1.75%
Advances 3.2% 12.5% 30.6% 28.1% 27.7% Total Income / Assets 10.51% 9.49% 11.55% 11.05% 10.67%
Total Assets 10.7% 15.8% 41.1% 27.5% 25.8% Cost / Assets 6.34% 6.80% 6.33% 5.84% 5.63%
NII 5.8% 2.6% 52.1% 27.9% 24.0% PBP / Assets 4.17% 2.69% 5.22% 5.21% 5.04%
Non-interest Income -3.5% 1.0% 87.7% 25.5% 13.8% Provisions / Assets 4.12% 5.23% 0.06% 0.69% 0.79%
Operating Expenses -6.7% 21.6% 20.4% 22.8% 22.0% PBT / Assets 0.05% -2.54% 5.16% 4.52% 4.26%
Operating Profits 27.0% -27.0% 151.2% 33.1% 22.4% Tax rate 18.6% 24.3% 25.0% 25.0% 25.0%
Core Operating profit 19.3% -23.9% 158.8% 29.8% 24.3% ROA 0.04% -1.92% 3.86% 3.39% 3.19%
Provisions 367.3% 43.9% -98.5% 1,378.2% 43.2% RoRWAs 0.07% -3.48% 7.52% 6.90% 6.50%
Reported PAT -97.6% -5,195.7% -360.2% 16.8% 19.2% Leverage 6.9 9.2 8.4 8.3 8.2
Yields / Margins (%) 0 0 0 0 0 ROE 0.3% -15.3% 33.7% 28.3% 26.4%
Interest Spread 8.18% 7.69% 9.14% 9.09% 9.30% Source: Company, JM Financial
NIM 9.25% 8.40% 9.83% 9.69% 9.73%
Profitability (%) 0 0 0 0 0 Valuations
Non-IR to Income 15.2% 15.0% 17.9% 17.6% 16.4% Y/E March FY21A FY22A FY23E FY24E FY25E
Cost to Income 60.3% 71.7% 54.8% 52.8% 52.7% Shares in Issue 1,728.3 1,728.3 1,954.7 1,954.7 1,954.7
ROA 0.04% -1.92% 3.86% 3.39% 3.19% EPS (INR) 0.0 -2.4 5.6 6.6 7.8
ROE 0.3% -15.3% 33.7% 28.3% 26.4% EPS (YoY) (%) -97.6% -5,195.7% -330.0% 16.8% 19.2%
Assets Quality (%) 0 0 0 0 0 PER (x) 770.7 -15.1 6.6 5.6 4.7
Slippages 7.37% 14.84% 2.07% 2.15% 2.10% BV (INR) 17 15 20 26 33
Gross NPA 7.07% 7.34% 2.88% 2.43% 2.37% BV (YoY) (%) 0.3% -13.9% 36.7% 29.2% 26.9%
Net NPAs 2.93% 0.61% 0.04% 0.25% 0.36% ABV (INR) 17 15 20 26 33
Provision Coverage 60.3% 92.2% 98.6% 90.0% 85.0% ABV (YoY) (%) -3.2% -10.8% 36.7% 29.2% 26.9%
Specific LLP 4.28% 8.32% -0.47% 0.86% 1.00% P/BV (x) 2.15 2.50 1.83 1.41 1.11
Net NPAs / Networth 14.3% 3.9% 0.2% 1.3% 1.9% P/ABV (x) 2.23 2.50 1.83 1.41 1.11
Capital Adequacy (%) 0 0 0 0 0 DPS (INR) 0.0 0.0 0.5 0.7 0.8
Tier I 25.07% 17.70% 22.70% 23.34% 23.81% Div. yield (%) 0.0% 0.0% 1.4% 1.8% 2.1%
CAR 26.44% 18.98% 25.80% 23.89% 24.24% Source: Company, JM Financial
Source: Company, JM Financial

JM Financial Institutional Securities Limited Page 3

Ujjivan SFB Small Finance Bank 9 June 2023

History of Recommendation and Target Price Recommendation History

Date Recommendation Target Price % Chg.

5-Oct-20 Buy 45

8-Nov-20 Buy 45 0.0

3-Feb-21 Buy 48 6.7

8-Aug-21 Buy 40 -16.7

12-May-22 Buy 24 -40.0

27-Jul-22 Buy 24 0.0

8-Nov-22 Buy 34 41.7

4-Feb-23 Buy 38 11.8

12-May-23 Buy 38 0.0

JM Financial Institutional Securities Limited Page 4

Ujjivan SFB Small Finance Bank 9 June 2023

APPENDIX I

JM Financial Inst itut ional Secur ities Lim ited

Corporate Identity Number: U67100MH2017PLC296081
Member of BSE Ltd. and National Stock Exchange of India Ltd.
SEBI Registration Nos.: Stock Broker - INZ000163434, Research Analyst - INH000000610
Registered Office: 7th Floor, Cnergy, Appasaheb Marathe Marg, Prabhadevi, Mumbai 400 025, India.
Board: +9122 6630 3030 | Fax: +91 22 6630 3488 | Email: [email protected] | www.jmfl.com
Compliance Officer: Mr. Sahil Salastekar | Tel: +91 22 6224 1073 | Email: [email protected]
Grievance officer: Mr. Sahil Salastekar | Tel: +91 22 6224 1073 | Email: [email protected]

Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
Definition of ratings
Rating Meaning
Buy Total expected returns of more than 10% stocks with market capitalisation in excess of INR 200 billion and REITs* and more than 15%
for all other stocks, over the next twelve months. Total expected return includes dividend yields.
Hold Price expected to move in the range of 10% downside to 10% upside from the current market price for stocks with market
capitalisation in excess of INR 200 billion and REITs* and in the range of 10% downside to 15% upside from the current market price
for all other stocks, over the next twelve months.
Sell Price expected to move downwards by more than 10% from the current market price over the next twelve months.
* REIT refers to Real Estate Investment Trusts.
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.
Important Disclosures
This research report has been prepared by JM Financial Institutional Securities Limited (JM Financial Institutional Securities) to provide information about the
company(ies) and sector(s), if any, covered in the report and may be distributed by it and/or its associates solely for the purpose of information of the select
recipient of this report. This report and/or any part thereof, may not be duplicated in any form and/or reproduced or redistributed without the prior written
consent of JM Financial Institutional Securities. This report has been prepared independent of the companies covered herein.
JM Financial Institutional Securities is registered with the Securities and Exchange Board of India (SEBI) as a Research Analyst and a Stock Broker having trading
memberships of the BSE Ltd. (BSE) and National Stock Exchange of India Ltd. (NSE). No material disciplinary action has been taken by SEBI against JM Financial
Institutional Securities in the past two financial years which may impact the investment decision making of the investor. Registration granted by SEBI and
certification from the National Institute of Securities Market (NISM) in no way guarantee performance of JM Financial Institutional Securities or provide any
assurance of returns to investors.
JM Financial Institutional Securities renders stock broking services primarily to institutional investors and provides the research services to its institutional
clients/investors. JM Financial Institutional Securities and its associates are part of a multi-service, integrated investment banking, investment management,
brokerage and financing group. JM Financial Institutional Securities and/or its associates might have provided or may provide services in respect of managing
offerings of securities, corporate finance, investment banking, mergers & acquisitions, broking, financing or any other advisory services to the company(ies)
covered herein. JM Financial Institutional Securities and/or its associates might have received during the past twelve months or may receive compensation from
the company(ies) mentioned in this report for rendering any of the above services.
JM Financial Institutional Securities and/or its associates, their directors and employees may; (a) from time to time, have a long or short position in, and buy or sell
the securities of the company(ies) 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 company(ies) covered under this report or (c) act as an advisor or lender/borrower to,
or may have any financial interest in, such company(ies) or (d) considering the nature of business/activities that JM Financial Institutional Securities is engaged in,
it may have potential conflict of interest at the time of publication of this report on the subject company(ies).
Neither JM Financial Institutional Securities nor its associates or the Research Analyst(s) named in this report or his/her relatives individually own one per cent or
more securities of the company(ies) covered under this report, at the relevant date as specified in the SEBI (Research Analysts) Regulations, 2014.
The Research Analyst(s) principally responsible for the preparation of this research report and members of their household are prohibited from buying or selling
debt or equity securities, including but not limited to any option, right, warrant, future, long or short position issued by company(ies) covered under this report.
The Research Analyst(s) principally responsible for the preparation of this research report or their relatives (as defined under SEBI (Research Analysts) Regulations,
2014); (a) do not have any financial interest in the company(ies) covered under this report or (b) did not receive any compensation from the company(ies) covered
under this report, or from any third party, in connection with this report or (c) do not have any other material conflict of interest at the time of publication of this
report. Research Analyst(s) are not serving as an officer, director or employee of the company(ies) covered under this report.

JM Financial Institutional Securities Limited Page 5

Ujjivan SFB Small Finance Bank 9 June 2023

While reasonable care has been taken in the preparation of this report, it does not purport to be a complete description of the securities, markets or
developments referred to herein, and JM Financial Institutional Securities does not warrant its accuracy or completeness. JM Financial Institutional Securities may
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. This
report is provided for information only and is not an investment advice and must not alone be taken as the basis for an investment decision.

The investment discussed or views expressed or recommendations/opinions given herein may not be suitable for all investors. The user assumes the entire risk of
any use made of this information. The information contained herein may be changed without notice and JM Financial Institutional Securities reserves the right to
make modifications and alterations to this statement as they may deem fit from time to time.

This report is neither an offer nor solicitation of an offer to buy and/or sell any securities mentioned herein and/or not an official confirmation of any transaction.

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 JM Financial Institutional
Securities and/or its affiliated company(ies) to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be
eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession this report may come, are required to inform themselves of
and to observe such restrictions.

Additional disclosure only for U.S. persons: JM Financial Institutional Securities has entered into an agreement with JM Financial Securities, Inc. ("JM Financial
Securities"), a U.S. registered broker-dealer and member of the Financial Industry Regulatory Authority ("FINRA") in order to conduct certain business in the
United States in reliance on the exemption from U.S. broker-dealer registration provided by Rule 15a-6, promulgated under the U.S. Securities Exchange Act of
1934 (the "Exchange Act"), as amended, and as interpreted by the staff of the U.S. Securities and Exchange Commission ("SEC") (together "Rule 15a-6").

This research report is distributed in the United States by JM Financial Securities in compliance with Rule 15a-6, and as a "third party research report" for
purposes of FINRA Rule 2241. In compliance with Rule 15a-6(a)(3) this research report is distributed only to "major U.S. institutional investors" as defined in Rule
15a-6 and is not intended for use by any person or entity that is not a major U.S. institutional investor. If you have received a copy of this research report and are
not a major U.S. institutional investor, you are instructed not to read, rely on, or reproduce the contents hereof, and to destroy this research or return it to JM
Financial Institutional Securities or to JM Financial Securities.

This research report is a product of JM Financial Institutional Securities, which is the employer of the research analyst(s) solely responsible for its content. The
research analyst(s) preparing this research report is/are resident outside the United States and are not associated persons or employees of any U.S. registered
broker-dealer. Therefore, the analyst(s) are not subject to supervision by a U.S. broker-dealer, or otherwise required to satisfy the regulatory licensing
requirements of FINRA and may not be subject to the Rule 2241 restrictions on communications with a subject company, public appearances and trading
securities held by a research analyst account.

Any U.S. person who is recipient of this report that wishes further information regarding, or to effect any transaction in, any of the securities discussed in this
report, must contact, and deal directly through a U.S. registered representative affiliated with a broker-dealer registered with the SEC and a member of FINRA. In
the U.S., JM Financial Institutional Securities has an affiliate, JM Financial Securities, Inc. located at Harborside Financial Center, 2500 Plaza 5, 25th Floor, Office
No. 2558, Jersey City, NJ 07311. Telephone +1 (201) 633-3610 which is registered with the SEC and is a member of FINRA and SIPC.

Additional disclosure only for U.K. persons: Neither JM Financial Institutional Securities nor any of its affiliates is authorised in the United Kingdom (U.K.) by the
Financial Conduct Authority. As a result, this report is for distribution only to persons who (i) have professional experience in matters relating to investments
falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Financial Promotion Order"), (ii)
are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial Promotion Order, (iii) are outside
the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial
Services and Markets Act 2000) in connection with the matters to which this report relates may otherwise lawfully be communicated or caused to be
communicated (all such persons together being referred to as "relevant persons"). This report is directed only at relevant persons and must not be acted on or
relied on by persons who are not relevant persons. Any investment or investment activity to which this report relates is available only to relevant persons and will
be engaged in only with relevant persons.

Additional disclosure only for Canadian persons: This report is not, and under no circumstances is to be construed as, an advertisement 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.

JM Financial Institutional Securities Limited Page 6