Report
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MOSL: INDOSTAR CAPITAL FINANCE (Buy)-Liquidity impacts disbursements-Provisioning in corporate lending book increases

INDOSTAR CAPITAL FINANCE: Liquidity impacts disbursements; Provisioning in corporate lending book increases

(INDOSTAR IN, Mkt Cap USD0.3b, CMP INR195, TP INR270, 38% Upside, Buy)

 2QFY20 PAT/PBT declined 23%/32% YoY to INR494m/INR675m (30% below est.). While operating profit grew 27% YoY to INR1.4b (10% beat), the miss was driven by higher credit cost of INR722m (v/s est. INR250m).

  • Company continued to calibrate disbursements due to tightness in liquidity. Retail disbursements were down ~50% QoQ to INR3.7b, driven by ~60% decline in vehicle finance disbursements, which in turn was due to both liquidity issues and overall demand environment
  • Overall AUM declined 7% QoQ as the company received large repayments in the corporate lending business (share of non-real estate in the total corporate book down from 37% to 27% QoQ). The corporate lending book is expected to run down to sub-INR30b by end-FY20.
Underlying
Indostar Capital Finance

IndoStar Capital Finance Ltd. IndoStar Capital Finance Limited is an India-based non-deposit accepting non-banking financial company (NBFC). The Company is engaged in providing financing solutions to corporates and loans to small and medium enterprise (SME) borrowers. It offers vehicle finance and housing finance products. It operates four lines of business, namely corporate lending, SME lending, vehicle financing and housing financing. Its corporate lending business consists of lending to mid-to-large sized corporates in manufacturing, services and infrastructure industries, and lending to real estate developers. Its SME lending business involves providing secured loans to small and medium size enterprises, including businessmen and manufacturers. Its vehicle finance business involves providing financing for purchases of used or new commercial vehicles, passenger vehicles and two-wheelers. Its housing finance business comprises two business lines, namely housing finance and retail housing finance.

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.

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