MOSL: ADITYA BIRLA CAPITAL (Buy)-Strong NIM performance-Insurance business improvement continues
Aditya Birla Capital: Strong NIM performance; Insurance business improvement continues
(ABCAP IN, Mkt Cap USD3.2b, CMP INR101, TP INR130, 29% Upside, Buy)
- PBT grew 46% YoY to INR5.2b in 4QFY19, largely driven by strong profit growth across the lending (NBFC +26% YoY and HFC 3.2x YoY) and AMC (+19% YoY) businesses. Even the insurance business witnessed an improvement in profitability during the quarter.
- NBFC: Loans grew 20% YoY (+5% QoQ) to INR517b. The share of high-yielding SME+Retail loan book rose to 50% (+300bp YoY). Importantly, it reported a decline in cost of funds to 8.2% from 8.3% a quarter ago. Increased share of high-yielding loans, a rise in the lending rate and a decline in CoF led to a highest-ever margin of 5.25% for 4QFY19. Asset quality was stable QoQ (ex-IL&FS), with GNPA% at 1.05%. ABCAP has recognized all four exposures of IL&FS of INR2.2b as GNPA (44bps of loan book) and the coverage ratio on the same stands at 27%.
- AMC: AAUM grew 6% YoY to INR2.65t; however, equity AAUM increased 21% YoY to INR890b. With the rising share of equity AAUM, PBT to AAUM improved to 29bp in 4Q and 26bp in FY19.
- Others: (1) HFC loan book grew 40% YoY to INR114b. (2) In life insurance, VNB margins improved to 9.5% and EV growth came in at 15% YoY to INR49b. (3) Across tenure, ABCAP reported a persistency improvement of 2-3%. (4) Combined ratio in health insurance improved to 149% in FY19 from 188% in the previous year.
Aditya Birla Capital Ltd. Aditya Birla Capital Limited, formerly Aditya Birla Financial Services Limited, is an investment company. The Company, through its subsidiaries, provides financing, investment, protection and advisory services to its customers and clients. Its financing services include lending, financing and wealth management solutions, customized solutions in areas of personal and business loans, corporate finance, mortgages, capital market based lending, housing finance solutions such as home loans, home improvement and construction loans. Its investment services include asset management services, investment solutions, portfolio management services, investment advisory services and securities broking. Its protection services include protection solutions, children's future solutions, wealth with protection solutions, health and wellness solution, and health insurance. Its advisory services include insurance broking and risk advisory solutions to companies and individuals.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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