Equitas Holdings
Estimate change
TP change
Rating change
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
EQUITAS IN
342
17 / 0.2
144 / 33
25/-19/-45
521
17 May 2020
4QFY20 Results Update | Sector: Financials
CMP: INR50
TP: INR65 (+31%)
Buy
Moratorium book swells; Asset quality a key monitorable
Credit cost to remain elevated
Financials & Valuations (INR b)
FY20 FY21E
Y/E March
15.0
16.0
NII
6.0
6.2
OP
2.4
1.6
NP
8.8
8.2
NIM (%)
7.1
4.7
EPS (INR)
80.3
83.9
BV/Sh. (INR)
75.6
75.6
ABV/Sh. (INR)
Ratios
9.7
5.8
RoE (%)
1.4
0.8
RoA (%)
Valuations
7.0
10.5
P/E(X)
0.6
0.6
P/BV (X)
0.7
0.7
P/ABV (X)
FY22E
17.8
6.9
2.6
8.0
7.6
89.1
78.5
8.8
1.1
6.5
0.6
0.6
In 4QFY20, EQUITAS provided higher than required provisions toward
COVID-19, which affected earnings despite strong NII/PPoP growth. Inspite
of the lockdown in the last few days of Mar’20, AUM growth was steady at
31% YoY. We remain cautious of EQUITAS’ asset quality trends in the near
term as 98.3% of borrowers have availed moratorium (93% of portfolio
value).
We cut our FY21/FY22E PAT estimate to primarily factor in higher
delinquency trend and moderation in loan growth. Maintain Buy.
~98% borrowers avail moratorium; high COVID-19 provisions affect
earnings
Shareholding pattern (%)
As On
Mar-20 Dec-19 Mar-19
Promoter
0.0
0.0
0.0
DII
34.5
37.2
42.0
FII
28.7
26.1
18.6
Others
36.9
36.7
39.4
FII Includes depository receipts
4QFY20 PAT stood at ~INR430m (33% YoY decline, 41% below estimates)
affected by higher provisions (INR996m) toward COVID-19. However, NII
grew 35% YoY to INR4.2b led by gross AUM growth of 31% YoY. NIMs for
FY20 improved by 56bp to 9.1%. During FY20, NII/PPoP/PAT grew
~30%/40%/16% YoY.
Total opex increased 14% YoY to INR3.1b, led by ~28% YoY growth in staff
expense while total revenues increased 26% YoY. Cost-income ratio
improved to 62.1% (v/s 66.2% QoQ) while PPoP stood at INR1.9b (+54%
YoY/ ~19% QoQ).
Total AUM grew 31% YoY/5% QoQ to INR153.7b, with the share of MFI
AUM at 23.5% (v/s ~26% in FY19). MFI AUM grew ~18% YoY to INR36.2b
while growth in non-MFI AUM was at 36% YoY/6% QoQ led by 36% YoY
growth in small business loans. Housing book grew 60% YoY while MSE
finance surged 270% YoY (19% QoQ). Disbursements during 4QFY20 grew
8.6% YoY (15.5% YoY for FY20).
Deposits increased ~20% YoY to INR107.9b, led by 37% YoY growth in TD
while CASA declined 3% YoY resulting in CASA ratio moderating to 20.5%
(v/s 20.9% in 3QFY20).
On the asset quality front,
GNPA/NNPA ratio improved by 14bp/7bp QoQ.
PCR improved ~170bp QoQ to 45.2%. Around 98.3% of customers availed
moratorium (93% by portfolio value) as at end-Apr’20.
Measures announced by the government for MSMEs:
~INR55b of exposure
would qualify for additional 20% loan facility under the government’s INR3t
MSME package.
COVID-19 impact:
As at end-Apr’20, 93% of EQUITAS’ portfolio availed
moratorium (98.3% of total borrowers).
In case of overdue accounts,
40% customers paid full EMIs while 25% have
paid partial dues.
Highlights from management commentary
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 6129 1542 |
Himanshu Taluja
(Himanshu.Taluja@motilaloswal.com)
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);
Yash Agarwal
(Yash.Agarwal@motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.