MOSL: Morning India (17/April/18): 1. L&T Finance (Well capitalized for growth); 2. DCB Bank; 3. Cement; 4. Metals Weekly
MOrning India (17/April/18): 1. L&T Finance (Well capitalized for growth); 2. DCB Bank; 3. Cement; 4. Metals Weekly
Today’s top research idea
L&T Finance: Well capitalized for growth; 15% accretion to BVPS on account of recent capital infusion
- L&T Finance (LTFH) recently raised equity capital amounting to INR30b, of which INR20b came from the parent (L&T). As a result, leverage has declined from previous elevated levels of ~8.5x to ~6.1x now.
- Over the past two years, there has been a modest increase in the share of retail loans from 26% to 30%. On the wholesale lending front, there has been a mix shift toward real estate finance, which is likely to translate into strong growth in the retail home loan segment in the coming years.
- Post capital infusion, our BVPS estimates for FY19/20E have been revised upward by 17%/13%. While RoE will appear optically lower due to low leverage (FY20E RoE of 16%), we expect LTFH to achieve its targeted RoE of 18% by FY21. The stock trades at 2.1x FY20E BVPS – a discount to our NBFC coverage universe (ex-GRUH) average of 2.4x.
Piping hot news
IMD monsoon forecast showers Indian economy with cheer
- Rainfall is likely to be normal during the June-to-September southwest monsoon season, the government’s weather office said on Monday. “For the third consecutive year, India will have a normal monsoon. There is very less probability of experiencing a deficit monsoon.
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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