MOSL: GRUH FINANCE (Neutral)-Steady quarter; margins and opex surprise positively
Gruh Finance: Steady quarter; margins and opex surprise positively
(GRHF IN, Mkt Cap USD3.5b, CMP INR646, TP INR600, 7% Downside, Neutral)
- GRUH Finance (GRHF) reported strong 4QFY18 results, with continued high-teens loan growth, an improvement in margins and lower-than-expected operating expenses. However, higher tax expenses drove in-line PAT.
- Disbursements were up 20% YoY to INR15.1b for the quarter and up 28% YoY for the full year. Disbursement growth in the quarter was driven by home loans (+24% YoY) and developer loans (+33% YoY).
- Loan growth came in at 18% YoY/5% QoQ. The loan book stands at INR156b. Growth in the LAP book continues to decline (+13% YoY), while the NRP loan book continues to de-grow (-9% YoY).
- Calculated margins came in at 6.08% (+33bp YoY), led by lower cost of funds (-45bp YoY to 7.41%). We believe cost of funds has bottomed out and should tick up from here. We have factored in 15bp spread compression in FY19.
- The C/I ratio surprised us positively (down 300bp YoY to 10.1%). Opex declined 3.4% YoY and 7.1% QoQ to INR233m. (20% below est. of INR289m).
- Asset quality was stable, with the GNPL ratio at 45bp v/s 31bp in 4QFY17.
GRUH Finance is a Housing Finance Company (HFC) based in India that is recognized by National Housing Bank. Co. offers loans to individuals for purchase, construction, repairs, renovation of dwelling units. Co. also offers loans to the Self-employed segment where in formal income proofs are not available. Co. also offers loans to professional for purchase of office premises. Co. maintains a network of approximately 152 office in 8 states of the country including: Gujarat, Maharashtra Karnataka, Rajasthan, Madhya Pradesh, Chhattisgarh, Tamil Nadu and Uttar Pradesh.
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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