MOSL: INDIABULLS HOUSING FINANCE (Under Review)-Focus on reducing corporate exposure
INDIABULLS HOUSING FINANCE: Focus on reducing corporate exposure
(IHFL IN, Mkt Cap USD3.1b, CMP INR514, Under Review)
** PAT of INR8.0b was 3% below our estimates. The marginal miss was on account of slightly higher credit costs and taxes.
** Disbursements were steady at 4QFY19 levels of ~INR75b. During the quarter, the company focused on reducing its commercial real estate (CRE) exposure due to the impending LVB merger. It got INR60b of CRE loans refinanced. As a result, overall AUM declined 6% QoQ/ 10% YoY to INR1.13t. Management targets to step up disbursements to INR100b, 2QFY20 onwards.
** Spreads declined ~20bp YoY to 3.12%, largely due to 100bp rise in cost of funds. AUM mix incrementally migrated towards retail loans (incl. LAP), the share of which stood at 84% v/s 83% QoQ and 79% YoY.
** During the quarter, the company paid down almost all its CP (share down from 4% to 1% QoQ). Also, due to the comfortable liquidity situation (INR285b liquidity on the balance sheet), IHFL assigned only INR15b of loans during the quarter, recording an upfront income of INR480m.
** During the quarter, IHFL recovered INR7b from Palais Royale. Since floating provisions are not allowed under Ind-AS, in order to utilize the Palais Royale provisions that were reversed, management classified certain assets as Stage 3 and utilized those provisions against them. These assets include small real estate exposures coupled with exposures to the Essel Group and Café Coffee Day. As a result, the GNPL ratio increased 60bp QoQ to 1.47%. The company increased its PCR by 300bp sequentially to 25%.
** LCR for the company amounts to 550%+, significantly above the RBI's proposed requirement.
Indiabulls Housing Finance is a housing finance company, provides home loans, loan against properties, and commercial vehicle loans primarily to salaried and self employed sectors in India. Co. offers loans against residential and commercial properties to small to mid-sized businesses, partnership firms, and private limited or closely held companies; and commercial loans, including new vehicle loans, used vehicle/refinance, top up loans, and balance transfers to various business owners. It also provides financial related advisory services and other related ancillary services; and sells insurance products.
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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