Report
Nitin Aggarwal
EUR 120.00 For Business Accounts Only

MOSL: EQUITAS HOLDINGS (Buy)-Business growth healthy; Higher provisions lead to PBT miss

EQUITAS HOLDINGS: Business growth healthy; Higher provisions lead to PBT miss

(EQUITAS IN, Mkt Cap USD0.4b, CMP INR91, TP INR125, 38% Upside, Buy)

 

  • Reported PAT declined 2% YoY to INR476m (in-line), led by one-time DTA markdown due to change in the corporate tax rate and higher provisions, which increased 47% QoQ. PBT grew 10% YoY to INR829m (MOFSLE: INR1b). For 1HFY20, PPoP/PAT grew 38%/27% to INR2.5b/INR1.1b.
  • PPoP at INR1.3b (+21% YoY) was driven by 29% YoY/4% QoQ growth in NII to INR3.5b (in-line). However, lending spreads/NIMs declined 27bp/5bp QoQ to 10.1%/8.8% as cost of funds increased 26bp sequentially. Other income stood at INR639m. Total opex increased INR2.9b, led by 28% YoY growth in staff expense. Cost-income ratio, thus, remained elevated at 69.1% (flat sequentially).
  • Total AUM grew 33% YoY to INR132.7b, with the share of MFI AUM at ~24% v/s ~27% in 2QFY19. On an absolute basis, MFI AUM grew 18% YoY to INR31.9b. Non-MFI AUM was also robust, growing 39% YoY to INR100.8b, led by 45%/31% YoY growth in small business loans/vehicle finance. Vehicle finance portfolio now constitutes ~24% of total AUM as at 2QFY20.
Underlying
Equitas Holdings

Equitas Holdings Limited (EHL) is the holding company. The Company is engages in the businesses through its subsidiaries: Equitas Micro Finance Limited (EMFL), which is engaged in micro finance; Equitas Finance Limited (EFL), which provides used commercial vehicle (UCV) loans, micro and small and enterprise (MSE) finance, and others; Equitas Housing Finance Limited (EHFL), which is engaged in affordable housing loans and micro housing loans, and Equitas Technology Private Limited (ETPL), which offers technology platform for freight, logistics, carriers and related services. The Company's segments include Micro Finance, Other Finance and Others. The Micro Finance segment consists of micro financing. The Other Finance segment consists of housing finance and vehicle finance. The Company also provides loans to subsidiaries and corporate guarantees for the borrowings of subsidiaries from banks and institutions.

Provider
Motilal Oswal
Motilal Oswal

​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.

Analysts
Nitin Aggarwal

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