reports
- Alpesh Mehta
MOSL: MAX Financial Services (Buy)-Steady performance; VNB margin mode...
MAX Financial Services: Steady performance; VNB margin moderates on seasonal factors (MAXF IN, Mkt Cap USD4.9b, CMP INR1060, TP INR1250, 18% Upside, Buy) Non-PAR growth and Persistency trends robust MAX Life Insurance (MAXLIFE) continued to demonstrate a resilient performance in a challenging macro environment, led by healthy 32% APE growth. This was owing to robust growth in Non-PAR Savings and recovery in ULIP. However, Protection growth has moderated, similar to that for peers. On the...
- Alpesh Mehta
MOSL: MANAPPURAM FINANCE (Buy)-Gold AUM and holdings moderate further;...
MANAPPURAM FINANCE: Gold AUM and holdings moderate further; auctions remain elevated (MGFL IN, Mkt Cap USD2.2b, CMP INR191, TP INR220, 15% Upside, Buy) Manappuram Finance (MGFL) reported consolidated PAT at INR4.4b (up ~19% YoY / down 7% QoQ; 8% miss) in 1QFY22. The company missed our expectations due to a 5% miss on NII (down 2% QoQ) at INR10.3b and elevated provisions at INR1.2b (11% above estimate). PPoP at INR7.1b (5% miss) was down 3% QoQ and up 11% YoY. The gold loan book declined ...
- Alpesh Mehta
MOSL: MUTHOOT FINANCE (Buy)-AUM and Gold holdings flat QoQ, auctions m...
(MUTH IN, Mkt Cap USD8.4b, CMP INR1547, TP INR1825, 18% Upside, Buy) PAT grew by ~16% YoY, but fell 2% QoQ to INR9.7b (~9% miss) in 1QFY22. This was driven by a miss on NII (down 4% QoQ due to lower yields) and slightly mitigated by lower opex (down 23% QoQ). Core Gold loans continued to exhibit resilience, with the portfolio remaining flat QoQ (up 29% YoY), despite muted Gold loan demand and disruption in branch operations during 1QFY22. The deterioration in standalone GS3 was along exp...
- Alpesh Mehta
MOSL: IIFL WEALTH (Buy)-Strong net inflows; healthy beat on profitabil...
IIFL WEALTH: Strong net inflows; healthy beat on profitability (IIFLWAM IN, Mkt Cap USD1.8b, CMP INR1534, TP INR1775, 16% Upside, Buy) PAT grew 13% QoQ and 42% YoY to INR1.17b (14% beat) in 1QFY22. The beat on profitability was driven by: a) a 12% beat on net revenue (+7 QoQ and 43% YoY to INR2.8b) owing to both Annual Recurring Revenue (ARR, 10% beat) and Transactional/Brokerage Revenue (TBR, -16% beat), b) better operating efficiency (CIR of 54% v/s our estimate of 56.5%), and c) a lowe...
- Alpesh Mehta
MOSL: PNB HOUSING FINANCE (Neutral)-Retailisation of AUM continues
PNB HOUSING FINANCE: Retailisation of AUM continues (PNBHOUSI IN, Mkt Cap USD1.6b, CMP INR720, TP INR760, 5% Upside, Neutral) PNBHF reported a PAT of INR2.4b in 1QFY22 (v/s INR2.6b YoY). The 45% beat was driven by lower-than-estimated credit costs (~0.9% annualized) and opex (47%/9% below our estimate). Asset quality deteriorated with Gross Stage 3 increasing by 155bp QoQ to 6%. Few corporate accounts in Stage 2 and under the SICR pool slipped into NPAs. Total restructured pool (under bo...
- Alpesh Mehta
MOSL: HDFC (Buy)-Core operating profit in-line; commentary suggests he...
HDFC: Core operating profit in-line; commentary suggests healthy recovery from second wave impact (HDFC IN, Mkt Cap USD59.8b, CMP INR2462, TP INR3290, 34% Upside, Buy) HDFC’s core PBT grew 12% YoY to INR32.2b (5% beat). NII (ex-assignment income) at INR41.3b was 2% above our estimate. On the other hand, provisions at INR6.9b were lower than our est. of INR8b. Better-than-expected MTM gains on investment led to an 11% beat on reported PAT (down 6% QoQ / 2% YoY). Strong disbursement growth...
- Alpesh Mehta
MOSL: CHOLAMANDALAM INV. & FINANCE (Buy)-Muted disbursements; PAT beat...
CHOLAMANDALAM INV. & FINANCE: Muted disbursements; PAT beat despite elevated credit costs (CIFC IN, Mkt Cap USD5.8b, CMP INR526, TP INR650, 23% Upside, Buy) Cholamandalam Inv & Fin (CIFC) reported 1QFY22 PAT of INR3.3b (11% beat), up 34% QoQ / down 24% YoY. This was on account of strong control over opex (12% below our estimates), despite elevated credit costs (up 10% QoQ to INR5.5b; annualized: 3.2%). NIM on AUM (calculated) stood at 7.4%, up 20bp QoQ. The PAT beat, however, belies t...
- Alpesh Mehta
MOSL: AAVAS FINANCIERS (Neutral)-Ability to recover and bounce back wi...
AAVAS FINANCIERS: Ability to recover and bounce back will be put to test (AAVAS IN, Mkt Cap USD2.7b, CMP INR2530, TP INR2820, 12% Upside, Neutral) PAT grew 20% YoY, but fell 32% QoQ, to INR599m (in line) in 1QFY22. NII rose 14% QoQ and 29% YoY, while operating profit fell 10% QoQ (7% beat). However, higher-than-expected credit cost of INR170m (est. INR110m) led to the in line PAT. Sharp deterioration in 1+dpd to 12.7% (up 620bp QoQ), relative to some of its other peers who have reported ...
- Alpesh Mehta
MOSL: SHRIRAM TRANSPORT FINANCE (Buy)-Healthy disbursements; NIM and c...
SHRIRAM TRANSPORT FINANCE: Healthy disbursements; NIM and credit costs surprise negatively (SHTF IN, Mkt Cap USD5b, CMP INR1391, TP INR1600, 15% Upside, Buy) PAT declined by 77% QoQ and 47% YoY to INR1.7b in 1QFY22 (~71% miss). Credit cost was elevated at INR14.4b (~4.9% annualized). Reported NIM at 6.4% was impacted by higher interest expenses and excess liquidity on the Balance Sheet. Disbursements were strong (down 15% QoQ), albeit a little surprising, even in a COVID-disrupted quarte...
- Alpesh Mehta
MOSL: SHRIRAM CITY UNION FINANCE (Buy)-No major deterioration in asset...
SHRIRAM CITY UNION FINANCE: No major deterioration in asset quality; restructuring minimal (SCUF IN, Mkt Cap USD1.6b, CMP INR1856, TP INR2150, 16% Upside, Buy) Elevated credit costs drive PAT miss Shriram City Union Finance (SCUF) posted PAT of INR2.1b (up 8% YoY; 14% miss) in 1QFY22. PPOP was largely in-line at INR5.7b (flat YoY). While NII stood at INR8.8b (in-line), credit costs stood at INR2.9b (~16% above est.), leading to the PAT miss. 1QFY22 was characterized by a sequentially mu...
- Alpesh Mehta
MOSL: LIC HOUSING FINANCE (Buy)-Miss across the board; asset quality s...
LIC HOUSING FINANCE: Miss across the board; asset quality surprises negatively (LICHF IN, Mkt Cap USD2.8b, CMP INR410, TP INR525, 28% Upside, Buy) PAT declined by 81% YoY (78% miss) to INR1.5b in 1QFY22. Higher than estimated finance costs of INR36b led to a 13% miss on our NII estimate. Elevated credit costs of INR8.3b (est. INR4.5b) added to the large PAT miss. Large wage revisions undertaken in 1QFY22 have led to a spike in operating expenses, leading to a weak operating performance (P...
- Alpesh Mehta
MOSL: CAN FIN HOMES (Buy)-Asset quality remains pristine; yields softe...
CAN FIN HOMES: Asset quality remains pristine; yields soften with re-pricing (CANF IN, Mkt Cap USD1b, CMP INR532, TP INR660, 24% Upside, Buy) Can Fin Homes (CANF)’s 1QFY22 PAT was up 17% YoY to INR1.09b (est. INR1.04b). The quarter was characterized by low disbursements (due to lockdowns), high operating efficiency, and strong asset quality resulting in low credit cost. NII stood at INR1.8b (3% miss) and declined 5% YoY /2% QoQ on sharp contraction in yields. Credit cost at INR65m (MOFSL...
- Alpesh Mehta
MOSL: ICICI SECURITIES (Buy)-Strong performance across revenue streams
ICICI SECURITIES: Strong performance across revenue streams (ISEC IN, Mkt Cap USD3.3b, CMP INR760, TP INR915, 20% Upside, Buy) 1QFY22 was another robust quarter for ISEC, following an overall strong FY21. PAT was up 58% YoY to INR3.04b (33% beat), driven by 36% growth in revenue (18% beat). C/I ratio inched up ~430bp sequentially to 45%, led by a 42% rise in employee costs. In our view, variable expenses were front loaded during 1QFY22. Employee cost-to-total income stood ~20% v/s ~23% in...
- Alpesh Mehta
MOSL: BAJAJ FINANCE (Buy)-Asset quality and growth show transitory pai...
(BAF IN, Mkt Cap USD48b, CMP INR5938, TP INR6750, 14% Upside, Buy) Bajaj Finance (BAF)’s 1QFY22 PAT was up 4% YoY / down 26% QoQ to ~INR10b (27% miss). While NII at INR37b (5% miss) was up 12% YoY, opex was largely in-line. Provisions came in at INR17.5b v/s our estimate of INR15b. The company aggressively wrote off ~INR9.2b worth of loans and kept COVID overlay provisions at INR4.8b, leading to high provisions. The GNPL ratio increased from 1.8% to 2.96% QoQ. BAF wrote off ~INR9.2b (60bp...
- Alpesh Mehta
MOSL: L&T FINANCE HOLDINGS (Buy)-Transient impact of COVID 2.0; recove...
L&T FINANCE HOLDINGS: Transient impact of COVID 2.0; recovery held up well in Jun’21 (LTFH IN, Mkt Cap USD3b, CMP INR91, TP INR110, 22% Upside, Buy) LTFH reported a 1QFY22 PAT of INR2.7b (35% miss). Additional COVID-19 provisions stood at INR3.7b in 1QFY22. It further restructured INR9.8b under OTR 2.0. While NII was broadly in line, lower other income, and higher opex (up 31% YoY) led to a PAT miss. Loan book fell ~11% YoY in 1QFY22, driven by a QoQ decline in Micro loans, 2W finance, a...
- Alpesh Mehta
MOSL: MUTHOOT FINANCE (Neutral)-Strong performance on growth; yields h...
MUTHOOT FINANCE: Strong performance on growth; yields higher (MUTH IN, Mkt Cap USD4.2b, CMP INR747, TP INR800, 7% Upside, Neutral) PAT increased 66% YoY to INR8.03b (26% beat) in 3QFY20. The quarter was driven by strong AUM growth (backed by large debt capital raise) and a yield improvement (largely driven by higher penal interest). AUM grew 7% QoQ/19% YoY (best growth in several quarters) to INR385b. Yields increased 100bp QoQ/370bp YoY to 24.9% – the highest in the past 11 quarters. We...
- Alpesh Mehta
MOSL: REPCO HOME FINANCE (Buy)-In-line operating performance; asset qu...
Repco Home Finance: In-line operating performance; asset quality stable (REPCO IN, Mkt Cap USD0.3b, CMP INR325, TP INR390, 20% Upside, Buy) PAT increased 25% YoY to INR697m (2% beat) in 3QFY20. While NII was largely in line with our estimate, higher opex (7% miss) was offset by lower provisioning (11% beat), leading to largely in-line PAT. Loan book grew 1% QoQ/9% YoY to INR116b, driven by sluggish growth in Tamil Nadu (TN; +6% YoY). Reported spreads improved 20bp QoQ/YoY to 3.3%, while ...
- Alpesh Mehta
MOSL: MAS Financial Services (Buy)-Growth slows down, but profitabilit...
MAS Financial Services: Growth slows down, but profitability improves (MASFIN IN, Mkt Cap USD0.9b, CMP INR1115, TP INR1200, 8% Upside, Buy) MASFIN’s 3QFY20 PAT of INR551m (25% beat, +21% YoY) was driven by higher upfront assignment income and lower cost of funds, marginally offset by higher opex and credit costs. Core business trends remained stable; disbursements have been range-bound at INR12-13b since the start of the IL&FS crisis. Hence, AUM growth has slowed from 26% YoY in 2QFY20 t...
- Alpesh Mehta
MOSL: SHRIRAM TRANSPORT FINANCE (Buy)-Asset quality surprises positive...
Shriram Transport Finance: Asset quality surprises positively; upgrade estimates by ~8% (SHTF IN, Mkt Cap USD3.1b, CMP INR987, TP INR1385, 40% Upside, Buy) SHTF reported 38% YoY growth in PAT to INR8.8b (27% beat). While operating profit was flat YoY at INR16.3b (3% beat), a 30% YoY decline in credit costs (34% beat) led to the strong PAT performance. NIM shrank 5bp/30bp QoQ/YoY to 7.14% GNPL ratio improved 10bp QoQ, driven by lower net slippages (-45% YoY to INR5.3b), while PCR was stab...
- Alpesh Mehta
MOSL: EQUITAS HOLDINGS (Buy)-Business growth healthy; Margin trajector...
Equitas Holdings: Business growth healthy; Margin trajectory improving (EQUITAS IN, Mkt Cap USD0.5b, CMP INR114, TP INR135, 19% Upside, Buy) Listing of SFB business remains a key overhang Equitas' 3QFY20 performance was healthy across, supported by higher other income and lower provisions. Business growth was strong while operating performance too remained healthy (NII, margins, C/I, PPoP). However, the listing of SFB remains a near-term overhang; it is pending SEBI approval and is likel...
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