June 2017 Results Preview | July 2017
Financials - NBFCs
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Improving performance across segments
MFI and vehicle finance portfolios showing signs of recovery
Company name
Bajaj Finance
Bharat Financial Inclusion
Cholamandalam Inv & Fin
Dewan Housing
GRUH Finance
HDFC
Indiabulls Housing
LIC Housing Fin
M & M Financial
Muthoot Finance
Repco Home Fin
Shriram City Union Fin
Shriram Transport Fin.
We expect NBFCs under our coverage to report PAT growth of 20% YoY in 1QFY18.
Post demonetization, we expect stable-to-improving trends in growth across product
segments in NBFCs. Pre-GST buying (especially consumer durables), strong auto OEM
growth and asset price inflation (CV) would also aid growth, in our view.
Farm loan waivers and expectations of normal monsoons have lifted sentiment in the
rural economy. Focus on collections has also helped companies to effect strong
recoveries. Vehicle financiers are expected to report healthy asset quality. Our
channel checks suggest that at-par delinquencies have come off in the MFI segment
and disbursements have resumed. This would benefit BHAFIN.
We expect continued decline in cost of funds, driven by excess liquidity in the system,
to offset yield pressure due to higher competition, thus keeping margins stable.
Within our NBFC coverage universe, BAF is likely to post 40%+ PAT growth, driven by
strong performance in CDs and 2W financing. Among HFCs, DEWH and IHFL are likely
to post earnings growth of 25%+ YoY, which is commendable. Repco Home Finance
and Bharat Financial Inclusion could report subdued performance.
Housing finance companies:
Barring Repco Home Finance, all HFCs under our
coverage are likely to post AUM growth in line with past trends. Loan growth for
REPCO may continue to be subdued this quarter. Although the Madras High Court
passed the order lifting the ban in March, there was some confusion due to which
the registrars did not take the order on board. However, only recently, the Court
issued a clarification that all properties that were registered prior to Sepember
2016, even by Gram Panchayats, are acceptable. For other HFCs, we expect stable
trends. We expect shift towards LAP for LICHF and towards corporate loans
(opportunistic in LRD segment) for HDFC to continue. Core retail housing yields
would remain under pressure due to higher competition but benefit on cost of funds
and change in product mix would partially offset pressure on spreads.
Asset finance companies:
We expect improvement in performance across asset
financiers. Bajaj Finance is likely to report strong AUM as well as PAT growth due to
strong performance in consumer durables (pre-GST buying). We expect growth for
vehicle finance players like SHTF and MMFS to pick up sequentially, helped by a
better rural economy. Auto OEMs have delivered decent volume growth in the
quarter. Asset quality is expected to improve with better liquidity post
demonetization and expectation of normal monsoon.
Microfinance companies:
Our industry interaction suggests significant improvement
in at-PAR delinquencies in the MFI segment, driving increased risk appetite in this
segment. While provisioning for the stressed book will impact earnings for the
quarter, the outlook is much better. Barring Maharashtra, there has been a marked
improvement in collection efficiency across all states.
Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 3980 4393
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
July 2017
1
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.

June 2017 Results Preview | Sector: Financials
Exhibit 1: Expected quarterly performance summary (INR m)
Sector
CMP
(INR)
NBFC
Bajaj Finance
Bharat Financial
Chola. Inv & Fin.
Dewan Housing
GRUH Finance
HDFC
Indiabulls Housing
LIC Housing Fin
M & M Financial
Muthoot Finance
Repco Home Fin
Shriram City Union
Shriram Transport Fin.
NBFC Banking Sector Aggregate
Financials Sector Aggregate
1,380
718
1,092
436
439
1,640
1,050
747
352
450
801
2,520
1,046
RECO
Buy
Neutral
Buy
Buy
Neutral
UR
Buy
Neutral
Buy
Buy
Buy
Buy
Buy
Sales (INR m)
Var % Var %
Jun-17
YoY
QoQ
19,084
2,352
6,660
5,521
1,567
24,274
11,928
10,470
8,428
8,793
1,043
7,921
14,546
122,586
769,157
36.0
18.7
20.3
20.9
28.2
8.9
24.1
27.0
24.8
23.1
24.2
15.4
8.0
19.5
13.5
13.5
43.0
1.0
3.0
-15.5
-14.9
0.0
0.7
-24.2
-23.5
1.4
11.0
3.3
-4.2
-1.9
EBDITA (INR m)
Var % Var %
Jun-17
YoY
QoQ
11,424
1,562
4,023
4,279
1,312
22,907
11,668
9,295
4,873
5,658
923
4,969
11,614
94,506
597,137
37.4
3.4
20.4
23.0
28.5
11.4
33.3
25.6
35.9
28.2
19.7
20.1
12.8
21.8
10.2
16.6
56.7
3.0
-6.7
-18.7
-18.3
20.3
3.8
-32.8
-31.2
2.3
14.9
1.7
-5.2
-13.1
Net Profit (INR m)
Var %
Var %
Jun-17
YoY
QoQ
5,801
562
1,965
2,498
778
16,038
8,610
5,863
1,538
3,483
479
2,125
4,381
54,119
222,912
36.8
29.1
-76.2
LP
18.5
-10.5
24.0
0.6
29.4
-29.5
12.9
-21.5
36.6
2.4
43.8
10.8
76.8
-34.3
28.9
8.2
21.2
-5.3
16.9
1669.4
17.1
192.8
20.3
8.8
43.9
94.7
Source: MOSL
Exhibit 2: Relative performance—3 months (%)
111
107
103
99
95
Sensex Index
MOSL Financials Index
Exhibit 3: Relative performance—1-year (%)
138
126
114
102
90
Sensex Index
MOSL Financials Index
Source: Bloomberg, MOSL
Source: Bloomberg, MOSL
Exhibit 4: Comparative valuation
Sector / Companies
NBFC
Bajaj Finance
Bharat Financial
Chola. Inv & Fin.
Dewan Housing
GRUH Finance
HDFC
Indiabulls Housing
LIC Housing Fin
M & M Financial
Muthoot Finance
Power Finance Corp
Repco Home Fin
Rural Electric. Corp.
Shriram City Union
Shriram Transport Fin.
NBFC Aggregate
Financials Sector Aggregate
July 2017
CMP
(INR)
1,380
718
1,092
436
439
1,640
1,050
747
352
450
123
801
173
2,520
1,046
Reco
Buy
Neutral
Buy
Buy
Neutral
UR
Buy
Neutral
Buy
Buy
Neutral
Buy
Neutral
Buy
Buy
EPS (INR)
PE (x)
PB (x)
ROE (%)
FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
48.3 64.4 86.6
41.3 53.0 55.5
55.0 66.4 79.4
37.0 45.4 54.3
10.4 12.5 15.4
50.7 55.9 65.0
88.9 113.9 137.0
47.9 53.8 62.4
13.6 16.4 19.7
41.0 43.3 50.2
27.2 30.2 33.8
35.8 42.5 50.9
35.0 40.4 46.1
132.8 171.2 202.4
78.5 98.5 114.1
28.6
17.4
19.8
11.8
42.4
32.4
11.8
15.6
26.0
11.0
4.5
22.4
4.9
19.0
13.3
15.9
17.8
21.4
13.6
16.5
9.6
35.2
29.3
9.2
13.9
21.5
10.4
4.1
18.8
4.3
14.7
10.6
13.5
14.3
15.9
12.9
13.7
8.0
28.5
25.2
7.7
12.0
17.9
9.0
3.6
15.8
3.7
12.4
9.2
11.5
11.8
6.4
3.3
3.4
1.6
11.9
5.9
3.2
3.0
2.9
2.4
0.7
3.7
0.9
2.9
1.9
3.0
2.1
5.1
2.6
2.9
1.4
9.9
4.9
2.8
2.5
2.7
2.1
0.6
3.2
0.8
2.5
1.6
2.6
1.9
4.0
2.2
2.4
1.2
8.2
4.2
2.5
2.2
2.4
1.8
0.6
2.7
0.7
2.1
1.4
2.2
1.7
24.6
20.9
18.5
13.9
30.8
18.3
29.0
20.6
11.4
23.2
17.0
18.1
19.1
16.2
14.7
19.0
11.7
26.4 28.0
21.6 18.6
18.9 19.2
15.3 16.2
30.8 31.4
17.4 17.3
32.7 34.2
19.7 19.5
12.8 14.2
21.4 21.6
16.8 16.6
18.2 18.4
19.1 18.8
18.1 18.3
16.3 16.7
19.1 19.3
13.1 14.2
Source: MOSL
2

June 2017 Results Preview | Sector: Financials
Bajaj Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
BAF IN
535.5
739 / 11
1431 / 762
2 / 41 / 54
CMP: INR1,380
TP: INR1,600 (+16%)
Buy
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoA on AUM (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
2017 2018E 2019E 2020E
55.1 75.7 98.9 129.5
36.4 51.2 68.0 90.9
18.4 26.4 35.2 47.3
33.6 48.3 64.4 86.6
40.7 43.7 33.5 34.4
175.6 216.8 271.8 345.7
3.3
3.6
3.6
3.7
21.7 24.6 26.4 28.0
14.0 14.0 14.0 14.0
41.1
7.9
0.2
28.6
6.4
0.3
21.4
5.1
0.3
15.9
4.0
3.9
We expect AUM growth of 32% YoY and 9% QoQ in 1QFY18, driven
by strong growth in consumer and commercial lending. Pre-GST
buying in consumer durables will help support growth.
NII should grow 36% YoY, resulting in stable margins on a YoY basis.
We expect 60bp C/I ratio improvement on a YoY basis to 40.8%.
Asset quality is likely to remain stable. As of March 2017, GNPAs
were at 1.68% and NNPAs at 0.44%. However, there will be some
impact of migration to 90dpd NPL recognition this quarter.
We expect provisions of INR2.5b as against INR2.9b in 4QFY17 and
INR1.8b in 1QFY17.
Net profit is likely to grow 37% YoY to INR5.8b.
The stock trades at 6.4x FY18E and 5.1x FY19E BV. Maintain
Buy.
Key issues to watch for
Commentary on business growth momentum.
Impact of demonetization on the 2W portfolio.
Guidance on margins due to changing product mix.
Asset quality trends, especially in LAP and 2W/3W businesses.
Performance of businesses such as rural, SME lending, lifestyle
financing and e-commerce financing.
Quarterly Performance
Y/E March
1Q
Operating Income
YoY Growth (%)
Interest expenses
Net Income
YoY Growth (%)
Other income
Total Income
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions and Cont.
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Loan Growth (%)
Borrowings Growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
22,864
38.9
8,833
14,031
44.8
147
14,178
5,865
8,312
58.1
1,797
6,515
2,275
4,240
53.8
39.5
40.5
41.4
34.9
FY17
2Q
23,470
39.7
9,562
13,909
41.2
190
14,098
6,144
7,954
40.8
1,691
6,263
2,185
4,078
45.9
37.8
43.4
43.6
34.9
3Q
26,930
30.6
9,802
17,128
30.5
109
17,237
6,939
10,297
33.5
1,797
8,500
2,943
5,557
36.0
32.6
30.2
40.3
34.6
4Q
26,650
39.1
9,837
16,813
51.4
79
16,892
7,099
9,794
51.7
2,897
6,897
2,406
4,492
42.6
36.1
33.0
42.0
34.9
1Q
29,806
30.4
10,722
19,084
36.0
200
19,284
7,860
11,424
37.4
2,500
8,924
3,123
5,801
36.8
32.0
32.0
40.8
35.0
FY18
2Q
30,740
31.0
11,366
19,375
39.3
400
19,775
8,270
11,505
44.6
2,500
9,005
3,152
5,853
43.5
30.0
32.0
41.8
35.0
3Q
36,043
33.8
12,275
23,768
38.8
200
23,968
9,030
14,938
45.1
2,500
12,438
4,353
8,085
45.5
33.0
38.0
37.7
35.0
4Q
35,243
32.2
13,090
22,153
31.8
424
22,577
9,195
13,382
36.6
3,135
10,247
3,586
6,661
48.3
35.0
35.0
40.7
35.0
(INR Million)
FY17
99,914
36.8
38,034
61,881
41.4
524
62,405
26,047
35,833
47.6
8,182
27,651
9,810
18,366
43.6
33.2
33.0
42.1
35.1
FY18
131,832
31.9
47,452
84,380
36.4
1,224
85,604
34,355
50,025
39.6
10,635
39,390
14,215
26,399
43.7
35.0
35.0
40.7
35.1
July 2017
3

June 2017 Results Preview | Sector: Financials
Bharat Financial Inclusion
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
BHAFIN IN
137.1
106/1.6
939 / 465
-3/-3/-20
CMP: INR718
TP: INR800 (+11%)
Neutral
Financial Snapshot (INR m)
Y/E March
NII
PPP
PAT
EPS (INR)
2017
7,775
5,522
2,897
21.0
2018E
11,244
7,986
5,698
41.3
2019E
14,991
10,662
7,310
53.0
2020E
19,158
13,594
7,664
55.5
BV/Sh. (INR)
177.3 218.6 271.6 327.1
RoA on AUM (%) 3.3
4.5
4.3
3.6
RoE (%)
15.1 20.9 21.6 18.6
Valuations
P/E (x)
34.2 17.4 13.6 12.9
P/BV (x)
4.0
3.3
2.6
2.2
BFI’s disbursements are likely to grow 10% YoY to INR43b, resulting
in GLP growth of 17% YoY and 8% QoQ.
Net interest income is likely to grow 14% YoY to INR3.2b.
NIM on AUM is likely to decline 50bp YoY to 13.3%.
Cost-to-income ratio is expected to increase 500bp YoY to 50.6%.
Asset quality is likely to remain stable – at-par delinquency has
declined QoQ.
We factor in provisions of INR1b, as against INR3.3b in 4QFY17 and
INR120m in 1QFY17.
Net profit is likely to decline 76% YoY to INR562m, driven by higher
provisions in 1QFY18 as well as a one-time tax gain in 1QFY17.
The stock trades at 3.3x FY18E and 2.6x FY19E BV. Maintain
Neutral.
Key issues to watch for
Management commentary on growth trends/demand for loans.
Management commentary on asset quality performance in key
states like UP, Maharashtra and Karnataka.
Guidance on C/I ratio.
Movement in borrowing costs and margins.
Quarterly Performance
Y/E March
Income from operations
Other Income
Total income
Y-o-Y Growth (%)
Interest expenses
Other income
Net Income
Y-o-Y Growth (%)
Operating Expenses
Provisions
Profit before tax
Y-o-Y Growth (%)
Tax Provisions
Net Profit
Y-o-Y Growth (%)
E: MOSt Estimates
1Q
3,341
348
3,690
53.2
1,361
452
2,780
52.9
1,269
120
1,391
74.9
-969
2,359
285.8
FY17
2Q
3,692
382
4,074
39.9
1,576
422
2,921
40.9
1,372
90
1,459
44.2
0
1,459
87.4
3Q
3,682
407
4,089
33.1
1,643
460
2,906
37.9
1,440
38
1,428
38.5
0
1,428
79.6
4Q
3,290
388
3,678
61.0
1,646
415
2,447
3.6
1,451
3,346
-2,349
-313.3
0
-2,349
-378.1
1Q
4,113
392
4,505
22.1
1,761
419
3,163
13.8
1,601
1,000
562
-59.6
0
562
-76.2
FY18
2Q
4,606
396
5,002
22.8
1,867
423
3,559
21.9
1,690
750
1,118
-23.3
0
1,118
-23.3
(INR Million)
FY17
FY18
3Q
5,159
400
5,559
35.9
2,091
427
3,896
34.0
1,856
250
1,790
25.3
0
1,790
25.3
4Q
5,457
803
6,260
61.0
2,372
748
4,636
89.4
2,120
288
2,228
-194.8
0
2,228
-194.8
14,005
1,526
15,531
32.8
6,225
1,748
11,054
32.2
5,533
3,594
1,928
-51.0
-969
2,897
-4.4
19,334
1,992
21,326
37.3
8,090
2,017
15,253
38.0
7,267
2,288
5,698
195.5
0
5,698
96.7
July 2017
4

June 2017 Results Preview | Sector: Financials
Cholamandalam Inv & Fin
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
CIFC IN
156.3
171 / 3
1244 / 805
6 / -4 / -1
CMP: INR1,091
TP: INR1,300 (+19%)
Buy
Financial Snapshot (INR b)
Y/E March
NII
PPP
Adj. PAT
EPS (INR)
EPS Gr. (%)
BV (INR)
BVPS Gr. (%)
RoAA (%)
RoE (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
2017
23.5
14.2
7.2
46.0
26.3
274
17
2.6
18.1
23.7
4.0
0.5
2018E
28.1
17.6
8.6
55.0
19.7
322
17
2.7
18.5
19.8
3.4
0.5
2019E
32.8
21.2
10.4
66.4
20.6
380
18
2.8
18.9
16.4
2.9
0.6
2020E
38.4
25.3
12.4
79.4
19.7
449
18
2.8
19.2
13.7
2.4
0.7
Vehicle finance segment continues to register strong growth. Home
equity too has witnessed some pick-up this quarter.
Disbursements are expected to increase 15% YoY, resulting in
15%/4% YoY/QoQ increase in AUM.
Margins are expected to increase slightly on a YoY basis, driven by
higher share of vehicle finance loans. We expect NIM of 7.7%.
As a result, NII growth is expected to be strong at 20% YoY.
Calculated cost-to-income ratio should decline 20bp to 40.2%.
We believe GNPLs have topped out and should decline going
forward, as the company has started invoking SARFAESI to
repossess properties. We expect provisions of INR1b v/s INR0.5b in
4QFY17 and INR0.8b in 1QFY17.
Net profit is likely to grow 19% YoY to INR1.97b.
The stock trades at 3.4x FY18E and 2.9x FY19E BV. Maintain
Buy.
Key issues to watch for
Business growth trends and management commentary on the
same.
Impact of BS4 and GST on business going forward.
Trend in opex, given management’s intent to reduce expense ratio
to 2.5% by FY20.
CIFC: Quarterly Performance
Y/E March
FY17
FY18
1Q
2Q
3Q
4Q
1Q
2Q
3Q
Income from Operations
11,017 11,558 11,698 12,069 12,190 12,677 13,311
Interest Expenses
5,481
5,694
5,658
5,476
5,530
5,751
6,039
Net Interest Income
5,536
5,864
6,040
6,594
6,660
6,926
7,272
YoY Growth (%)
13.8
20.6
20.1
22.5
20.3
18.1
20.4
Other Op. and Other Income
68
69
60
65
69
69
69
Net Operating Income
5,604
5,933
6,100
6,659
6,728
6,995
7,341
YoY Growth (%)
14.3
21.0
20.5
22.6
20.1
17.9
20.3
Operating Expenses
2,264
2,527
2,588
2,754
2,706
2,794
2,885
Operating Profit
3,341
3,405
3,512
3,905
4,023
4,201
4,456
YoY Growth (%)
20.4
22.7
17.9
19.1
20.4
23.4
26.9
Provisions & Loan Losses
804
772
1,003
529
1,000
1,000
1,400
Profit before Tax
2,537
2,634
2,509
3,376
3,023
3,201
3,056
Tax Provisions
880
924
884
1,181
1,058
1,120
1,070
Net Profit
1,657
1,709
1,625
2,196
1,965
2,081
1,987
YoY Growth (%)
50.3
55.0
34.9
50.7
18.5
21.7
22.2
E: MOSL Estimates; * Quaterly nos and full year nos will not tally due to different way of reporting financial nos
(INR Million)
FY17
FY18E
4Q
13,970
6,046
7,925
20.2
77
8,001
20.2
3,042
4,960
27.0
1,005
3,954
1,383
2,572
17.1
45,781
22,308
23,473
13.3
822
24,296
13.4
10,133
14,162
9.1
3,106
11,056
3,868
7,187
26.4
51,463
23,367
28,097
19.7
969
29,065
19.6
11,426
17,639
24.6
4,405
13,234
4,631
8,603
19.7
July 2017
5

June 2017 Results Preview | Sector: Financials
Dewan Housing Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
DEWH IN
313.2
137 / 2
468 / 204
5 / 62 / 92
CMP: INR436
TP: INR530 (+22%)
Buy
Financial Snapshot (INR m)
Y/E March
NII
PPP
Adj. PAT
EPS (INR)
EPS Gr. (%)
BV (INR)
RoAA (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
P/ABV (x)
Div. Yield (%)
2017 2018E 2019E 2020E
18.2 22.7 28.1 34.0
16.2 20.4 25.1 30.2
9.3 11.6 14.2 17.0
29.6 37.0 45.4 54.3
18.5 25.0 22.7 19.6
252
279
315
357
1.2
1.2
1.3
1.3
14.4 13.9 15.3 16.2
15.7 23.2 23.2 23.2
14.7
1.7
1.7
0.9
11.8
1.6
1.6
1.7
9.6
1.4
1.4
2.1
8.0
1.2
1.2
2.5
Business growth has picked up well post the impact of
demonetizaton. We expect 15% YoY growth in disbursements to
drive 3.4%/20% QoQ/YoY growth in AUM in the quarter.
Margins are likely to remain largely stable at 3%. As a result, we
expect 21% YoY growth in NII in the quarter.
Calculated cost-to-income ratio should decline 160bp QoQ to
26.5%, driven by lower advertising and legal costs.
Asset quality is likely to remain stable, with GNPAs of 0.95%. We
factor in provisions of INR500m for 1QFY18.
Net profit is likely to grow 24% YoY to INR2.5b.
The stock trades at 1.6x FY18E and 1.4x FY19E BV. Maintain
Buy.
Key issues to watch for
Business growth trends and momentum, and management
commentary on the same.
Management view on margins due to change in liability mix.
Asset quality trends in non-retail and LAP segments.
Guidance on cost structure, going forward.
DEWH: Quarterly performance
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Fees and other income
Net Income
YoY Growth (%)
Operating Expenses
YoY Growth (%)
Operating Profits
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Profit after tax
YoY Growth (%)
Loan growth (%)
Borrowings growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
19,319
14,754
4,565
14.5
275
4,840
15.5
1,361
8.4
3,479
18.6
450
3,029
1,015
2,014
16.2
18.3
20.4
28.1
33.5
FY17
2Q
3Q
21,227
23,151
16,307
18,001
4,920
5,150
21.0
20.8
451
514
5,371
5,664
18.3
21.6
1,398
1,497
6.1
9.1
3,972
4,167
23.2
26.9
450
450
3,522
3,717
1,196
1,269
2,326
2,448
29.0
31.7
16.0
16.9
38.5
28.0
26.0
26.4
34.0
34.2
4Q
22,835
17,475
5,360
22.6
943
6,303
29.1
1,717
10.8
4,586
37.7
830
3,756
1,273
2,483
30.9
16.7
33.1
27.2
33.9
1Q
23,520
17,999
5,521
20.9
300
5,821
20.3
1,542
13.3
4,279
23.0
500
3,779
1,281
2,498
24.0
20.0
29.0
26.5
33.9
FY18
2Q
3Q
24,225
25,194
18,359
18,542
5,866
6,652
19.2
29.2
450
500
6,316
7,152
17.6
26.3
1,617
1,695
15.6
13.2
4,700
5,457
18.3
31.0
400
800
4,300
4,657
1,458
1,579
2,842
3,078
22.2
25.8
20.0
20.0
7.0
11.0
25.6
23.7
33.9
33.9
(INR Million)
FY17
FY18
4Q
26,585
19,403
7,182
34.0
695
7,877
25.0
1,943
13.2
5,934
29.4
1,134
4,800
1,627
3,173
27.8
23.9
7.6
24.7
33.9
86,531
66,536
19,995
19.8
2,182
22,177
21.4
5,973
8.7
16,204
26.9
2,180
14,024
4,754
9,270
27.1
18.5
45.7
26.9
33.9
99,524
74,302
25,221
26.1
1,945
27,166
22.5
6,797
13.8
20,369
25.7
2,834
17,535
5,944
11,591
25.0
0.0
23.9
25.0
33.9
July 2017
6

June 2017 Results Preview | Sector: Financials
Gruh Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
GRHF IN
364.6
160 / 2
459 / 270
9 / 17 / 37
CMP: INR439
TP: INR443 (+1%)
Neutral
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
ABV/Sh. (INR)
RoA (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
2017 2018E 2019E 2020E
5.3
6.8
8.1
9.8
4.7
6.2
7.4
9.1
3.0
3.8
4.6
5.6
8.1
10.4
12.5
15.4
21.5
27.3
20.5
23.2
30.5
36.8
44.3
53.6
30.5
36.8
44.3
53.8
2.4
2.5
2.5
2.5
30.4
30.8
30.8
31.4
34.0
34.0
34.0
34.0
54.0
14.4
0.6
42.4
11.9
0.8
35.2
9.9
1.0
28.5
8.2
1.2
We expect loan growth to be largely in line with trend at 4% QoQ
and 19% YoY.
Margins are likely to expand 30bp YoY to 4.64%.
As a result, NII is likely to grow 28% YoY to INR1.6b.
Operating expenses are likely to grow 27% YoY, resulting in largely
stable cost-to-income ratio (16.3%).
We expect asset quality to remain stable. We expect provisions of
IN150m for the quarter.
Net profit is likely to grow 29% YoY to INR778m.
The stock trades at 11.9x FY18E and 9.9x FY19E BV. Maintain
Neutral.
Key issues to watch for
Business outlook; loan growth in various geographies.
Movement in borrowing costs and margins.
Outlook on asset quality.
Management’s outlook on developments in the affordable
housing space.
Commentary on government schemes in the affordable housing
space.
(INR Million)
FY17
FY18
3Q
4,489
4,489
17.8
2,671
1,818
265
1,553
20.0
200
1,353
447
907
41.6
59.5
14.6
33.0
4Q
4,985
4,985
19.8
2,783
2,203
303
1,899
17.7
35
1,865
609
1,256
13.7
55.8
13.8
32.7
14,874
14,874
16.6
9,196
5,678
935
4,742
23.6
322
4,420
1,454
2,966
21.8
61.8
16.5
32.9
17,771
17,771
19.5
10,461
7,309
1,118
6,192
30.6
565
5,627
1,851
3,777
27.3
58.9
15.3
32.9
Quarterly performance
Y/E MARCH
Operating Income
Total income
Y-o-Y Growth (%)
Interest expenses
Net Income
Operating Expenses
Operating Profit
Y-o-Y Growth (%)
Provisions and Cont.
Profit before Tax
Tax Provisions
Net Profit
Y-o-Y Growth (%)
Int Exp/ Int Earned (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
3,463
3,463
16.7
2,241
1,222
201
1,021
17.5
125
896
294
601
19.6
64.7
16.5
32.8
FY17
2Q
3,674
3,674
17.8
2,351
1,323
273
1,050
20.1
91
958
339
619
19.9
64.0
20.7
35.4
3Q
3,810
3,810
17.8
2,297
1,513
219
1,294
29.8
327
967
326
640
19.2
60.3
14.5
33.8
4Q
4,161
4,161
12.3
2,307
1,854
241
1,613
23.3
14
1,600
495
1,104
25.8
55.4
13.0
31.0
1Q
4,019
4,019
16.0
2,452
1,567
256
1,312
28.5
150
1,162
383
778
29.4
61.0
16.3
33.0
FY18
2Q
4,278
4,278
16.4
2,556
1,722
294
1,428
36.0
180
1,248
412
836
35.0
59.7
17.1
33.0
July 2017
7

June 2017 Results Preview | Sector: Financials
HDFC
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
HDFC IN
1574.7
2583 / 40
1681 / 1185
2 / 18 / 17
CMP: INR1,640
Under Review
Financial Snapshot (INR b)
Y/E March
2017 2018E 2019E 2020E
NII
99.5 105.9 118.6 137.0
PAT
74.4
80.5
90.9 105.7
Adj. EPS (INR) 36.4
39.2
44.2
52.2
EPS Gr. (%)
11.7
7.9
12.6
18.0
BV/Sh. (INR) 252.9 278.7 334.8 389.0
ABV/Sh. (INR) 202.1 227.9 285.0 318.4
RoAA (%)
2.4
2.3
2.3
2.3
Core RoE (%)
19.3
18.3
17.4
17.3
Payout (%)
37.1
43.5
43.5
43.5
Valuation
AP/E (x)
30.5
24.7
19.7
16.7
P/BV (x)
6.5
5.9
4.9
4.2
AP/ABV (x)
5.5
4.2
3.1
2.7
Div. Yield (%)
1.1
1.2
1.3
1.5
We estimate AUM growth of 15.4% YoY, marginally below the
growth in the prior quarters. We expect the pick-up in corporate
loan growth to sustain.
NII is expected to grow 10% YoY, due to ~20bp compression in
calculated margins to 3.06%.
We expect 7% YoY decline in operating expenses to INR2.1b.
Asset quality has remained healthy over past several quarters,
and the trend is likely to continue. Asset quality in the corporate
loan book would be a key monitorable.
We estimate provisions at INR750m as against INR1,480m in the
prior quarter.
We expect 13% YoY PAT growth in 1QFY18 (adjusted for one-
offs).
The stock trades at 4.2x FY18E AP/ABV and 3.1x FY19E AP/ABV
(price adjusted for value of other businesses and book value
adjusted for investments made in those businesses).
Key issues to watch for
Loan growth and uptick in corporate loans.
Impact of demonetization on real estate demand.
Movement in spreads and margins (on individual loans), and
asset quality trends.
Quarterly Performance
Y/E March
Net Interest Income
YoY Change (%)
Gross fee income
Core Income
YoY Change (%)
Operating Expenses
% of core income
Comission expenses
% of core income
Core Operating profits
YoY Change (%)
Provisions
Core PBT
YoY Change (%)
Profit on Sale of Inv.
Dividend income
One off expense/Prov
Other Income
PBT
YoY Change (%)
Provision for Tax
PAT
YoY Change (%)
E: MOSL Estimates
July 2017
1Q
22,291
9.3
1,913
24,204
9.3
2,274
9.4
1,369
5.7
20,561
7.5
650
19,911
6.9
9,216
510
-2,750
111
26,997
38.3
8,290
18,707
37.5
FY17
2Q
22,972
14.5
1,985
24,958
14.4
2,048
8.2
1,344
5.4
21,565
14.2
950
20,615
12.2
281
4,560
118
25,575
10.1
7,310
18,265
13.9
3Q
25,755
18.0
1,944
27,699
17.2
2,142
7.7
1,011
3.6
24,546
19.5
1,170
23,376
17.7
34
1,788
114
25,312
15.6
8,300
17,012
11.9
4Q
28,524
15.5
2,702
31,226
13.2
1,904
6.1
1,300
4.2
28,023
13.9
1,480
26,543
12.2
486
2,228
125
29,382
-19.3
8,940
20,442
-21.6
1Q
24,274
8.9
2,000
26,274
8.6
2,117
8.1
1,250
4.8
22,907
11.4
750
22,157
11.3
20
600
135
22,911
-15.1
6,873
16,038
-14.3
FY18
2Q
24,969
8.7
2,200
27,169
8.9
2,159
7.9
1,400
5.2
23,610
9.5
2,750
20,860
1.2
2,500
6,500
-1,500
135
28,494
11.4
8,998
19,496
6.7
(INR Million)
FY17
FY18
3Q
26,336
2.3
2,600
28,936
4.5
2,264
7.8
1,450
5.0
25,222
2.8
1,900
23,322
-0.2
2,500
2,000
-750
135
27,207
7.5
8,387
18,820
10.6
4Q
30,342
6.4
3,182
33,524
7.4
2,593
7.7
1,527
4.6
29,404
4.9
2,300
27,104
2.1
4,980
1,895
-750
135
33,363
13.5
10,234
23,129
13.1
99,542
14.5
8,486
108,029
13.6
8,368
7.7
5,024
4.7
94,637
13.8
4,250
90,387
12.3
10,017
9,144
-2,750
468
107,266
6.1
32,840
74,426
4.9
105,921
6.4
9,982
115,903
7.3
9,134
7.9
5,627
4.9
101,142
6.9
4,700
96,442
6.7
10,000
10,995
-3,000
538
114,975
7.2
34,493
80,483
8.1
8

June 2017 Results Preview | Sector: Financials
Indiabulls Housing
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
IHFL IN
421.3
443 / 7
1187 / 616
-7 / 46 / 38
CMP: INR1,050 TP: INR1,300 (+24%)
Buy
We expect strong loan growth to continue, driven by retail home
loans. We estimate 2% QoQ and 32% YoY loan growth.
Total income should grow 35% YoY to INR16b.
Expenses (including provisions) are likely to grow 39% YoY.
Asset quality is expected to remain stable. In 4QFY17, GNPAs were
at 0.85% and NNPAs at 0.36%.
PAT is likely to grow 37% YoY to INR8.6b during the quarter.
The stock trades at 3.2x FY18E and 2.8x FY19E BV. Maintain
Buy.
Financial Snapshot (INR b)
Y/E March
2017 2018E 2019E 2020E
Net Fin inc
39.9
52.6
66.5
79.5
PPP
45.5
60.2
76.3
92.4
EPS (INR)
69.0
88.9 113.9 137.0
EPS Gr. (%)
24.0
28.8
28.1
20.3
BV/Sh. (INR)
288
325
372
429
RoA on AUM (%)
3.1
3.1
3.2
3.0
RoE (%)
25.5
29.0
32.7
34.2
Payout (%)
52.5
50.0
50.0
50.0
Valuations
P/E (x)
15.2
11.8
9.2
7.7
P/BV (x)
3.6
3.2
2.8
2.4
P/ABV (x)
3.6
3.2
2.8
2.4
Div. Yield (%)
3.4
4.2
5.4
6.5
Key issues to watch for
AUM growth trend and growth guidance post demonetization.
Movement in incremental spreads and margins, especially given
the sharp home loan rate cuts.
Asset quality trends in the corporate and loans against property
segments.
Quarterly Performance
Y/E March
Income from operations
Other Income
Total income
Y-o-Y Growth (%)
Interest expenses
Net Income
Y-o-Y Growth (%)
Operating Expenses
Profit before tax
Y-o-Y Growth (%)
Tax Provisions
Net Profit
Minority Int
Net Profit after MI
Y-o-Y Growth (%)
E: MOSL Estimates
1Q
23,720
2,255
25,975
28.3
14,109
11,866
33.9
3,116
8,750
26.4
2,401
6,349
-49
6,301
23.2
(INR Million)
FY17
2Q
25,098
3,651
28,749
28.0
16,279
12,470
24.6
3,258
9,212
24.3
2,352
6,861
-18
6,843
23.2
3Q
25,859
4,186
30,045
30.2
16,329
13,716
26.8
3,658
10,058
24.9
2,555
7,502
13
7,515
24.7
4Q
29,314
2,935
32,249
21.8
17,391
14,858
15.6
5,160
9,698
9.0
1,325
8,373
32
8,405
24.4
1Q
29,754
4,072
33,826
30.2
17,826
16,000
34.8
4,331
11,668
33.3
3,034
8,635
25
8,610
36.6
FY18
2Q
30,349
4,072
34,421
19.7
18,271
16,149
29.5
4,458
11,691
26.9
3,040
8,651
25
8,626
26.1
3Q
31,866
4,072
35,938
19.6
19,002
16,936
23.5
4,354
12,582
25.1
3,271
9,310
25
9,285
23.6
4Q
35,508
4,072
39,580
22.7
19,740
19,840
33.5
5,033
14,808
52.7
3,850
10,958
25
10,933
30.1
FY17
103,990
13,027
117,017
26.8
64,108
52,910
24.4
15,192
37,718
20.5
8,633
29,085
-22
29,064
24.0
FY18E
127,477
16,288
143,764
22.9
74,839
68,925
30.3
18,176
50,749
34.5
13,195
37,554
100
37,454
28.9
July 2017
9

June 2017 Results Preview | Sector: Financials
LIC Housing Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
LICHF IN
505.0
377 / 6
794 / 470
2 / 27 / 35
CMP: INR747
TP: INR750 (+0%)
Neutral
Financial Snapshot (INR b)
Y/E March
2017 2018E 2019E 2020E
NII
36.5
42.9
48.0
55.6
PPP
32.4
38.3
43.0
49.9
Adj. PAT
19.3
24.2
27.2
31.5
Adj. EPS (INR) 38.2
47.9
53.8
62.4
EPS Gr. (%)
16.3
25.3
12.3
16.0
BV/Sh (INR)
213.2 251.6 294.8 344.8
RoAA (%)
1.5
1.6
1.6
1.7
RoE (%)
19.4
20.6
19.7
19.5
Payout (%)
18.8
19.7
19.7
19.7
Valuations
P/E (x)
19.5
15.6
13.9
12.0
P/BV (x)
3.5
3.0
2.5
2.2
Div. Yield (%)
0.8
1.1
1.2
1.4
LICHF is likely to report strong earnings growth of 44% YoY.
However, this would be driven by one-off expenses in 1QFY17.
We expect loan growth of 15% YoY, driven primarily by the LAP
segment. The share of builder loans is likely to remain around 4%
of overall book. Growth in the retail home loan book would be
the key monitorable.
Margins are likely to improve ~25bp YoY, driven by significantly
lower cost of funds due to falling bond yields.
Operating expenses would grow 18% YoY – however, there were
one-off wage provision expenses in 1QFY17.
Asset quality is likely to remain stable. We model provisions of
INR275m, as against INR893m in 4QFY17 and INR1.2b in 1QFY17.
The stock trades at 3x FY18E and 2.5x FY19E BV. Maintain
Neutral.
Key issues to watch for
Trend in incremental spreads, given stable share of LAP and
lower cost of funds.
Performance of corporate loan book and loans against property.
Management commentary on increasing competitive intensity
and margin trends.
LICHF: Quarterly Performance
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Fees and other income
Net Income
YoY Growth (%)
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions and Cont.
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Loan Growth (%)
Borrowings Growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
33,263
25,018
8,245
25.1
535
8,780
24.2
1,382
7,399
18.7
1,165
6,234
2,156
4,078
6.7
15.4
15.7
15.7
34.6
FY17
2Q
3Q
34,283 35,125
25,626 25,972
8,657
9,154
20.8
22.6
616
362
9,273
9,516
18.8
18.7
1,364
1,407
7,909
8,109
17.3
19.2
303
453
7,606
7,656
2,659
2,663
4,948
4,993
20.2
19.2
14.9
15.3
14.2
15.0
14.7
14.8
35.0
34.8
4Q
36,096
25,699
10,396
26.6
523
10,919
22.7
1,965
8,954
22.3
893
8,061
2,769
5,292
18.1
15.5
13.9
18.0
34.4
1Q
36,684
26,213
10,470
27.0
450
10,920
24.4
1,625
9,295
25.6
275
9,020
3,157
5,863
43.8
15.1
13.5
14.9
35.0
FY18
2Q
3Q
37,474 38,479
26,869 27,675
10,605 10,805
22.5
18.0
590
650
11,195 11,455
20.7
20.4
1,650
1,775
9,545
9,680
20.7
19.4
280
280
9,265
9,400
3,243
3,290
6,022
6,110
21.7
22.4
15.3
15.5
13.8
14.5
14.7
15.5
35.0
35.0
4Q
39,666
28,676
10,990
5.7
680
11,670
6.9
1,858
9,812
9.6
259
9,552
3,343
6,209
17.3
13.8
13.9
15.9
35.0
(INR Million)
FY17
138,767
102,315
36,452
23.8
2,036
38,489
21.1
6,118
32,371
19.4
2,813
29,558
10,247
19,311
16.3
15.5
13.9
15.9
34.7
FY18
152,303
109,432
42,870
17.6
2,370
45,240
17.5
6,908
38,332
18.4
1,094
37,238
13,033
24,205
25.3
13.8
13.9
15.3
35.0
July 2017
10

June 2017 Results Preview | Sector: Financials
Mahindra Financial Services
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
MMFS IN
565.0
199 / 3
405 / 244
-9 / 11 / -14
CMP: INR352
TP: INR415 (+18%)
Buy
Financial Snapshot (INR b)
Y/E March
2017 2018E 2019E 2020E
NII
33.2
38.0
43.4
50.8
PPP
19.3
22.1
25.3
30.2
PAT
4.0
7.7
9.2
11.1
EPS (INR)
7.1
13.6
16.4
19.7
BV/Sh.(INR)
114.6 122.7 132.3 144.0
ABV/Sh (INR)
94.8
99.2 107.5 118.5
RoA on AUM (%)
1.0
1.7
1.7
1.8
RoE (%)
6.3
11.4
12.8
14.2
Payout (%)
39.8
41.0
41.0
41.0
Valuations
P/E (x)
49.7
26.0
21.5
17.9
P/BV (x)
3.1
2.9
2.7
2.4
P/ABV (x)
3.7
3.5
3.3
3.0
Div. Yield (%)
0.8
1.3
1.6
2.0
There has been a pick-up in growth in the quarter. We expect
3.5%/15% QoQ/YoY AUM growth in the quarter.
NII is likely to increase 26% YoY (due to the low base in 1QFY17).
We expect 15% growth in operating expenses, resulting in 400bp
YoY reduction in the C/I ratio 43.5%.
Asset quality is likely to deteriorate sequentially, but this is a
seasonal phenomenon.
We factor in INR2.5b provisions in 1QFY18 v/s INR3.6b in 4QFY17
and INR2.2b in 1QFY17.
The stock trades at 2.9x FY18E and 2.7x FY19E BV. Maintain
Buy.
Key issues to watch for
Management commentary on performance of rural areas.
Commentary on pick-up in the CV cycle.
Asset quality trend in the wake of good monsoon.
Margin and growth trends.
Performance of subsidiaries.
Quarterly Performance
Y/E March
Operating Income
Other Income
Total income
YoY Growth (%)
Interest Expenses
Net Income
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Cost to Income Ratio (%)
Provisions/Operating Profits (%)
Tax Rate (%)
E: MOSL Estimates
1Q
13,664
93
13,757
0.5
6,910
6,847
3,260
3,587
-22.1
2,245
1,341
472
870
-2.2
47.6
62.6
35.2
FY17
2Q
3Q
14,916 14,904
241
130
15,157 15,035
5.4
6.7
7,086
7,441
8,071
7,593
3,567
3,645
4,504
3,949
-10.5
-11.2
3,042
4,190
1,462
-241
514
-85
948
-156
-35.1 -123.3
44.2
48.0
67.5
106.1
35.2
35.2
4Q
18,255
173
18,427
9.1
7,137
11,290
4,037
7,252
6.7
3,614
3,638
1,298
2,341
-36.8
35.8
49.8
35.7
1Q
15,759
200
15,959
16.0
7,331
8,628
3,755
4,873
35.9
2,500
2,373
835
1,538
76.8
43.5
51.3
35.2
FY18
2Q
3Q
16,444
16,786
200
200
16,644
16,986
9.8
13.0
7,575
7,789
9,069
9,197
4,107
4,197
4,961
5,000
10.1
26.6
2,200
2,600
2,761
2,400
972
845
1,789
1,555
88.7 -1,094.7
45.3
45.6
44.3
52.0
35.2
35.2
4Q
19,527
227
19,754
7.2
7,850
11,904
4,650
7,255
0.0
2,974
4,281
1,507
2,774
18.5
39.1
41.0
35.2
(INR Million)
FY17
61,739
636
62,375
5.6
28,574
33,801
14,509
19,292
-7.6
13,091
6,202
2,198
4,003
-40.5
42.9
67.9
35.4
FY18
68,516
827
69,343
11.2
30,545
38,798
16,709
22,089
14.5
10,274
11,817
4,159
7,658
91.3
43.1
46.5
35.2
July 2017
11

June 2017 Results Preview | Sector: Financials
Muthoot Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
MUTH IN
399.5
180 / 3
481 / 261
6 / 40 / 42
CMP: INR450
TP: INR550 (+22%)
Buy
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
BV/Sh.(INR)
RoA - AUM (%)
RoE (%)
Div. Yld. (%)
P/E (x)
P/BV (x)
2017 2018E 2019E 2020E
33.6
22.0
11.8
29.5
163.1
4.6
19.4
1.3
15.2
2.8
39.5
26.6
16.4
41.0
189.2
5.6
23.2
2.7
11.0
2.4
44.6
30.0
18.8
47.1
219.2
5.5
23.0
3.1
9.6
2.1
51.2
34.8
21.8
54.5
253.9
5.6
23.0
3.6
8.3
1.8
AUM is expected to grow 10% YoY and 4.4% QoQ to INR285b.
Calculated margins are likely to improve YoY to 13% led by decline
in funding costs.
As a result, NII is expected to grow 22% YoY to INR9b.
Asset quality is likely to remain largely stable. GNPL ratio in the
prior quarter was 2.06%.
We estimate provisions of INR300m as against INR176m in 1QFY17.
PAT is expected to grow 29% YoY to INR3.5b
The stock trades at 2.4x FY18E and 2.1x FY19E BV. Maintain
Buy.
Key issues to watch for
Management commentary on business growth and steps taken to
sustain AUM growth.
Plan of branch expansion.
Movement in yields and margins, with declining cost of funds.
Progress in gold auctions.
Quarterly Performance
Y/E March
Income from operations
Other operating income
Total Operating income
YoY Growth (%)
Other income
Total Income
YoY Growth (%)
Interest Expenses
Net Income
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
E: MOSL Estimates
1Q
12,712
252
12,964
13.7
44
13,008
13.8
5,571
7,437
3,025
4,413
50.1
176
4,237
1,534
2,703
47.6
FY17
2Q
3Q
13,497 13,225
320
184
13,817 13,409
21.6
17.8
45
56
13,862 13,464
21.6
18.0
5,937
5,970
7,925
7,494
3,130
3,000
4,795
4,495
69.5
51.2
171
39
4,624
4,456
1,657
1,545
2,967
2,911
70.0
55.9
4Q
16,962
135
17,096
18.2
36
17,132
18.0
5,460
11,672
3,449
8,223
35.9
2,330
5,893
2,675
3,218
21.3
1Q
14,417
200
14,617
12.8
45
14,662
12.7
5,624
9,038
3,380
5,658
28.2
300
5,358
1,875
3,483
28.9
FY18
2Q
3Q
14,850 15,592
225
200
15,075 15,792
9.1
17.8
50
55
15,125 15,847
9.1
17.7
5,905
6,260
9,220
9,588
3,482
3,482
5,738
6,106
19.7
35.9
200
600
5,538
5,506
1,938
1,927
3,600
3,579
21.3
23.0
(INR Million)
FY17
FY18E
4Q
18,368
275
18,643
9.0
71
18,714
9.2
5,938
12,776
3,652
9,124
11.0
355
8,769
3,069
5,700
77.1
56,395
891
57,286
17.8
181
57,467
17.9
22,938
34,529
12,603
21,926
48.2
2,716
19,211
7,411
11,799
45.7
63,228
900
64,128
11.9
221
64,348
12.0
23,726
40,622
13,996
26,627
21.4
1,455
25,172
8,810
16,362
38.7
July 2017
12

June 2017 Results Preview | Sector: Financials
Repco Home Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
REPCO IN
62.6
50 / 1
923 / 500
2 / 22 / -11
CMP: INR801
TP: INR936 (+17%)
Buy
Financial Snapshot (INR b)
Y/E March
2017 2018E 2019E 2020E
NII
3.7
4.6
5.5
6.6
PPP
3.3
4.1
4.9
5.9
PAT
1.8
2.2
2.7
3.2
EPS (INR)
29.1 35.8 42.5 50.9
BV/Sh. (INR) 181.7 214.4 253.2 299.7
RoAA (%)
2.2
2.3
2.2
2.2
RoE (%)
17.4 18.1 18.2 18.4
Payout (%)
8.7
8.7
8.7
8.7
Valuation
P/E (x)
27.5 22.4 18.8 15.8
P/BV (x)
4.4
3.7
3.2
2.7
Div. Yield (%)
0.3
0.3
0.4
0.5
We expect loan growth to remain moderate at 16% YoY. This is
due to confusion regarding the Madras High Court order due to
which registrars did not take the order on board. However, the
matter was sorted out at the end of 1QFY17.
Calculated margins are likely to increase 30bp YoY on account of
decline in cost of funds due to MCLR cuts by banks.
C/I ratio is expected to increase 90bp YoY to 17.1%.
GNPL is expected to increase seasonally. Hence, provisions are
expected to be INR185m v/s INR116m in 4QFY17 and INR179m in
1QFY17.
PAT is likely to grow 21% YoY to INR479m.
The stock trades at 3.7x FY18E and 3.2x FY19E BV. Maintain
Buy.
Key issues to watch for
Business outlook, loan growth, and share of home loans and LAP.
Repayment trends on account of high share of self-employed
customers.
Movement in borrowing costs and margins.
Asset quality trends in the LAP segment.
REPCO: Quarterly performance
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Other income
Total Income
YoY Growth (%)
Operating Expenses
YoY Growth (%)
Operating Profits
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Profit after tax
YoY Growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
2,389
1,550
840
26.5
80
920
26.0
149
-3.5
771
33.9
179
592
196
395
30.8
16.2
33.2
FY17
2Q
3Q
2,500
2,589
1,597
1,682
903
907
22.1
16.2
98
67
1,000
974
22.0
15.5
163
163
-6.8
1.9
837
811
29.9
18.7
127
96
710
714
253
250
457
464
17.0
20.4
16.3
16.8
35.7
35.0
4Q
2,663
1,635
1,028
20.7
73
1,102
16.8
200
30.7
902
14.1
116
786
280
506
19.8
18.2
35.6
1Q
2,743
1,700
1,043
24.2
70
1,113
21.0
190
28.0
923
19.7
185
737
258
479
21.2
17.1
35.0
FY18
2Q
2,880
1,785
1,095
21.3
84
1,179
17.9
197
20.8
982
17.3
148
833
292
542
18.6
16.7
35.0
(INR Million)
FY17
FY18E
3Q
3,024
1,875
1,150
26.8
92
1,242
27.5
203
24.2
1,039
28.2
163
876
307
569
22.6
16.3
35.0
4Q
3,188
1,920
1,268
23.3
94
1,362
23.6
219
9.4
1,143
26.8
141
1,002
349
653
29.1
16.1
34.8
10,141
6,463
3,678
21.1
318
3,996
19.8
676
5.1
3,320
23.3
519
2,802
979
1,823
21.4
16.9
35.0
11,836
7,280
4,556
23.9
340
4,896
22.5
810
19.8
4,087
23.1
638
3,449
1,205
2,243
23.1
16.5
35.0
July 2017
13

June 2017 Results Preview | Sector: Financials
Shriram City Union Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
SCUF IN
65.9
148 / 2.2
2650 / 1648
9/18/31
CMP: INR2,520
TP: INR2,900 (+15%)
Buy
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoA (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
2017
28.5
17.2
5.6
84
5
763
2.7
11.7
7
29.9
3.3
0.6
2018E
33.8
21.3
8.8
133
57
874
3.6
16.2
16
19.0
2.9
0.7
2019E
40.0
25.4
11.3
171
29
1019
4.0
18.1
15
14.7
2.5
0.9
2020E
47.2
30.1
13.3
202
18
1193
4.0
18.3
14
12.4
2.1
1.0
1QFY18 was a good quarter in terms of growth. SCUF’s AUM is
expected to grow 4.4% QoQ and 18% YoY to INR242b, driven by
16% YoY growth in disbursements.
Margins are expected to remain largely stable. Hence, NII growth
is expected to be 15% YoY.
Slower growth in operating expenses (10% YoY) is expected to
drive 20% YoY PPoP growth.
We expect asset quality to remain largely stable. We factor in
provisions of INR1.7b, as against INR4.1b in 4QFY17 and INR1.4b
in 1QFY17.
The stock trades at 2.9x FY18E and 2.5x FY19E BVPS. Maintain
Buy.
Key issues to watch for
Trends in asset quality in each segment.
Business growth and momentum, and management
commentary on the same.
Movement in borrowing costs and margins.
Performance of the housing finance subsidiary.
Management commentary on impact of GST.
Quarterly Performance
Y/E MARCH
FY17
FY18
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
Interest Income
10,535 11,153 11,557 11,071 11,957 12,495 13,120 13,069
Interest expenses
3,672
3,802
3,933
3,937
4,036
4,116
4,219
4,476
Net Interest Income
6,863
7,351
7,624
7,134
7,921
8,379
8,900
8,593
Y-o-Y Growth (%)
19.7
22.1
17.7
14.6
15.4
14.0
16.7
20.5
Fees and Other Income
15
3
6
5
60
60
60
70
Net Operating Income
6,878
7,354
7,630
7,139
7,981
8,439
8,960
8,663
Y-o-Y Growth (%)
19.2
22.1
17.8
11.8
16.0
14.7
17.4
21.4
Operating Expenses
2,739
2,829
2,977
2,815
3,012
3,117
3,243
3,389
Operating Profit
4,139
4,525
4,653
4,324
4,969
5,321
5,717
5,275
Y-o-Y Growth (%)
21.3
29.3
19.5
26.2
20.1
17.6
22.9
22.0
Provisions
1,356
1,390
2,242
4,118
1,700
1,734
1,769
2,642
Profit before Tax
2,784
3,135
2,412
206
3,269
3,587
3,948
2,632
Tax Provisions
966
1,090
835
86
1,144
1,255
1,382
903
Net Profit
1,818
2,045
1,577
120
2,125
2,332
2,566
1,730
Y-o-Y Growth (%)
23.1
34.3
-9.5
-78.4
16.9
14.0
62.7 1,340.2
Int Exp/ Int Earned (%)
34.9
34.1
34.0
35.6
33.8
32.9
32.2
34.2
Cost to Income Ratio (%)
39.8
38.5
39.0
39.4
37.7
36.9
36.2
39.1
Tax Rate (%)
34.7
34.8
34.6
41.6
35.0
35.0
35.0
34.3
E: MOSL Estimates; * Quaterly nos and full year nos will not tally due to different way of reporting financial nos
FY17
43,796
15,344
28,452
19.1
76
28,528
18.2
11,359
17,168
25.8
8,632
8,536
2,976
5,561
5.0
35.0
39.8
34.9
INR m
FY18E
50,640
16,847
33,793
18.8
250
34,043
19.3
12,761
21,282
24.0
7,845
13,437
4,684
8,753
57.4
33.3
37.5
34.9
July 2017
14

June 2017 Results Preview | Sector: Financials
Shriram Transport Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
SHTF IN
226.9
237 / 4
1325 / 778
2 / -2 / -30
CMP: INR1,046
TP: INR1,339 (+28%)
Buy
Financial Snapshot (INR b)
Y/E March
Net Inc.
PPP
PAT
Cons.PAT
EPS (INR)
Cons. EPS (INR)
BV/Sh (INR)
Cons. BV (INR)
RoA on AUM (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/B (x)
Div. Yield (%)
2017 2018E 2019E 2020E
55.2 60.4 68.2 78.2
43.7 48.3 54.6 62.9
12.6 17.6 22.0 25.8
12.6 17.8 22.3 25.9
55.4 77.4 96.8 113.9
55.6 78.5 98.5 114.1
498
555 634.8 728.7
500
564 646.0 740.1
2.0
2.6
2.9
3.0
11.7 14.7 16.3 16.7
8.4 18.6 17.4 17.4
18.8
2.1
0.4
13.3
1.9
1.2
10.6
1.6
1.4
9.2
1.4
1.6
SHTF’s AUM is expected to remain sluggish at 8% YoY.
The company will continue to benefit from declining cost of
funds, which should help offset yield pressure. We expect margins
to remain stable at 7.3%.
As a result, NII growth is expected to remain moderate at 8% YoY.
Due to cost-cutting measures (reduction in headcount) taken in
FY17, we expect operating expenses to decline 7% YoY in 1QFY18.
Asset quality is expected to remain stable. We factor in INR4.8b
NPL provisions v/s INR8.8b in 4QFY17 and INR4.55b in 1QFY17.
The stock trades at 1.9x FY18E and 1.6x FY19E consolidated BV.
Maintain
Buy.
Key issues to watch for
Business growth and momentum, and management
commentary on the same.
Movement in borrowing costs and margins.
Asset quality trends, given impact of demonetization.
Recoveries in equipment financing portfolio.
Management commentary on impact of GST.
SHTF: Quaterly Performance
Y/E March
Interest Income
Interest expenses
Net Interest Income
YoY Growth (%)
Securitisation income
1Q
24,764
13,165
11,598
15.5
1,876
FY17
2Q
3Q
24,626 24,438
13,358 12,825
11,268 11,613
8.9
1.5
2,262
2,508
4Q
24,185
12,746
11,440
-10.2
2,647
1Q
25,032
13,000
12,031
3.7
2,515
FY18
2Q
3Q
25,532 26,171
13,130 13,327
12,402 12,843
10.1
10.6
2,540
2,565
(INR Million)
FY17
FY18
4Q
27,031
13,613
13,418
17.3
2,048
98,013
52,094
45,919
3.1
9,293
55,212
8.8
758
55,970
8.7
12,288
43,682
13.8
24,443
19,239
6,666
12,573
6.7
8.2
16.6
22.0
34.6
103,766
53,072
50,694
10.4
9,669
60,363
9.3
835
61,198
9.3
12,865
48,333
10.6
21,506
26,828
9,255
17,572
39.8
12.1
15.8
21.0
34.5
Net Income (Incl. Securitization)
13,474 13,530 14,121 14,087 14,546 14,942 15,409 15,466
YoY Growth (%)
18.6
13.4
6.9
-2.4
8.0
10.4
9.1
9.8
Fees and Other Income
167
169
183
240
180
189
198
268
Net Operating Income
13,641 13,699 14,304 14,327 14,726 15,131 15,607 15,734
YoY Growth (%)
18.4
12.8
6.8
-2.1
8.0
10.5
9.1
9.8
Operating Expenses
3,341
3,138
2,905
2,903
3,112
3,157
3,203
3,393
Operating Profit
10,300 10,561 11,398 11,424 11,614 11,974 12,404 12,341
YoY Growth (%)
19.6
15.6
12.7
6.4
12.8
13.4
8.8
8.0
Provisions
4,603
4,621
6,105
9,114
4,875
5,080
5,580
5,971
Profit before Tax
5,697
5,940
5,293
2,310
6,739
6,894
6,824
6,370
Tax Provisions
1,956
2,063
1,834
813
2,359
2,413
2,389
2,095
Net Profit
3,741
3,877
3,460
1,496
4,381
4,481
4,436
4,275
YoY Growth (%)
16.5
14.7
-7.8
4.0
17.1
15.6
28.2
185.7
AUM Growth (%)
23.6
19.1
14.6
8.2
8.0
10.0
12.0
12.1
Securitization Inc. / Net Inc. (%)
13.7
16.5
17.5
18.5
17.1
16.8
16.4
13.0
Cost to Income Ratio (%)
24.5
22.9
20.3
20.3
21.1
20.9
20.5
21.6
Tax Rate (%)
34.3
34.7
34.6
35.2
35.0
35.0
35.0
32.9
E: MOSL Estimates; * Quaterly nos and full year nos will not tally due to different way of reporting financial nos
July 2017
15

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