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.
 Motilal Oswal Financial Services
Equitas Holdings
Valuation and view
EQUITAS has reported steady business growth despite the lockdown in the last
few days of Mar’20. It has also increased the mix of non-MFI loans. Operating
performance has remained strong led by higher NII growth. Further, it has made
higher COVID-19 provisions as ~98% of borrowers have availed moratorium,
which is significantly higher in comparison to peers. Management has indicated
that INR55b of loans would quality for additional lending under the
government’s MSME package; however, we still remain cautious on EQUITAS’
asset quality. We estimate credit cost to rise sharply to 2.7% for FY21E. We,
thus, cut our PAT estimates by 45%/37% for FY21/FY22E. We revise our TP to
INR65 (0.8x FY22 ABV). Maintain Buy.
FY20E
2Q
3Q
3,505 3,836
29.1
23.3
639
857
4,145 4,693
2,862 3,108
1,282 1,584
20.9
30.4
454
405
829 1,180
353
239
476
941
-2.4
51.2
132
100
130
33
44
2.9
1.6
43.8
146
105
137
37
33
2.9
1.7
43.5
FY20E
4QE
3,765
13.0
781
4,545
2,936
1,609
27.5
419
1,190
462
728
5.9
150
111
147
27
26
3.0
1.7
40.7
Quarterly performance
Y/E March
Net Interest Income
% Change (YoY)
Other Income
Total Income
Operating Expenses
Operating Profit
% Change (YoY)
Provisions
Profit before Tax
Tax
Net Profit
% Change (YoY)
Operating Parameters
AUM (INR b)
Deposits (INR b)
Loans (INR b)
AUM Growth (%)
Deposit Growth (%)
Asset Quality
Gross NPA (%)
Net NPA (%)
PCR (%)
E:MOFSL Estimates
1Q
2,544
17.8
612
3,156
2,395
761
6.1
209
552
198
354
96.2
93
57
84
32
154
2.8
1.5
46.9
FY19
2Q
2,716
11.0
717
3,433
2,372
1,061
1,392.3
308
753
265
487
-389.6
100
70
94
36
125
3.4
2.0
40.9
(INR m)
v/s
Est
13
2,168
-6
9
5
17
2,635
210
-51
-67
-41
-3,901
3Q
3,111
33.1
709
3,820
2,605
1,215
195.6
245
970
348
622
-303.3
107
79
106
38
114
3.1
1.8
44.2
4Q
3,147
26.7
790
3,938
2,713
1,225
81.7
262
963
321
642
84.4
117
90
116
42
91
2.5
1.4
43.4
1Q
3,372
32.6
592
3,964
2,738
1,225
61.1
308
917
327
590
66.7
123
91
120
32
60
2.8
1.6
44.1
4Q
4,240
34.7
736
4,976
3,092
1,884
53.8
1,300
584
154
430
-33.1
154
108
137
31
20
2.7
1.7
45.2
FY19
11,517
22.2
2,829
14,346
10,085
4,261
127.5
1,024
3,237
1,132
2,106
3,775.3
117
90
116
42
91
2.5
1.4
43.4
FY20
14,953
29.8
2,824
17,777
11,801
5,976
40.2
2,466
3,509
1,073
2,436
15.7
154
108
137
31
20
2.7
1.7
45.2
2
-3
-6
456
-622
-28
0
455
Quarterly snapshot
P/L, INR m
Net Interest Income
Other Income
Total Income
Operating Expenses
Employee
Others
Operating Profits
Core Operating
Profits
Provisions
PBT
Taxes
PAT
17 May 2020
1Q
2,160
820
2,980
2,263
1,352
911
717
717
439
278
98
180
2Q
FY18
3Q
4Q
2,485
433
2,918
2,244
1,220
1,024
674
553
138
536
187
348
1Q
2,544
612
3,156
2,395
1,381
1,013
761
631
209
552
198
354
2Q
FY19
3Q
4Q
3,147
790
3,938
2,713
1,456
1,257
1,225
1,067
262
963
321
642
1Q
3,372
592
3,964
2,738
1,664
1,074
1,225
1,222
308
917
327
590
2Q
FY20
3Q
4Q
4,240
736
4,976
3,092
1,869
1,223
1,884
1,866
1,300
584
154
430
Change (%)
YoY
QoQ
35
-7
26
14
28
-3
54
75
397
-39
-52
-33
11
-14
6
-1
2
-4
19
18
221
-50
-35
-54
2,446
98
2,545
2,474
1,600
874
71
71
174
-103
65
-168
2,337
326
2,663
2,252
1,327
925
411
411
869
-458
-152
-306
2,716
717
3,433
2,372
1,346
1,026
1,061
1,059
308
753
265
487
3,111
709
3,820
2,605
1,329
1,276
1,215
1,214
245
970
348
622
3,505
639
4,145
2,862
1,725
1,137
1,282
1,274
454
829
353
476
3,836
857
4,693
3,108
1,839
1,270
1,584
1,580
405
1,180
239
941
2
 Motilal Oswal Financial Services
Equitas Holdings
FY18
FY19
FY20
Change (%)
YoY
QoQ
Balance Sheet
(INRb)
Deposits
Loans
AUM's
Loan mix (%)
MFI
Vehicles
Small Business loans
MSE Finance
Corporate loans
Others
Asset Quality
(INRb)
GNPA
NNPA
Slippages
Asset Quality Ratios
GNPA (%)
NNPA (%)
PCR (Calc, %)
Credit Cost
Business Ratios (%)
CASA
Cost to Income
Cost to assets
Tax Rate
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
23
61
70
42.0
27.7
27.5
2.0
0.4
0.2
1Q
3.0
1.6
0.0
4.9
3.0
45.7
2.9
26.1
75.9
9.6
35.1
31
64
73
36.1
28.3
30.4
3.4
1.1
0.3
37
72
77
47
78
82
27.8
27.3
35.6
5.0
2.4
1.9
4Q
2.1
1.1
0.0
2.7
1.5
47.1
0.7
34.6
76.9
7.2
35.0
57
84
93
26.1
25.5
35.3
5.6
2.7
4.4
1Q
2.4
1.3
0.6
2.8
1.5
46.9
1.0
32.1
75.9
6.8
35.9
70
94
100
79
106
107
90
116
117
26.2
25.2
39.1
1.5
3.9
4.0
4Q
3.0
1.7
0.6
2.5
1.4
43.4
0.9
25.2
68.9
7.1
33.3
91
120
123
25.3
24.5
40.6
2.3
4.5
2.8
1Q
3.3
1.9
0.8
2.8
1.6
44.1
1.0
24.5
69.1
6.8
35.7
100
130
132
105
137
146
108
137
154
23.5
24.5
40.9
4.4
5.3
1.5
4Q
4.2
2.3
0.9
2.7
1.7
45.2
3.8
20.5
62.1
6.5
26.4
20
19
31
3
0
5
32.0
28.0
33.5
4.4
1.5
0.7
FY18
2Q
3Q
3.7
3.6
2.0
1.2
0.0
0.0
5.0
1.6
67.4
5.1
32.6
84.6
8.3
33.2
27.1
27.6
24.8
25.4
37.5
38.2
0.6
1.0
4.3
3.6
5.7
4.2
FY19
2Q
3Q
3.2
3.4
1.9
1.9
1.2
0.7
3.4
2.0
40.9
1.6
28.3
69.1
6.6
35.2
3.1
1.8
44.2
1.0
25.5
68.2
7.2
35.8
24.2
24.0
24.5
24.5
40.5
40.6
3.3
3.9
5.2
5.2
2.3
1.9
FY20
4Q
4Q
3.8
4.2
2.1
2.4
1.1
1.3
2.9
1.6
43.8
1.6
22.4
69.1
6.8
42.6
2.9
1.7
43.5
1.2
20.9
66.2
7.0
20.2
-269
-44
-75
-8
176
29
281
50
143
12
-256
-40
Change (bp)
YoY
QoQ
41
0
37
-3
46
-26
19
22
184
284
-476
-676
-56
-692
-14
-7
168
257
-46
-410
-42
618
5.8
3.2
46.3
1.1
28.3
97.2
10.0
-62.9
Highlights from management commentary
COVID-19 related impact
EQUITAS has made provisions of ~INR0.99b toward COVID-19, which are in
excess of the RBI’s requirement (INR29.8m represents the minimum provision of
entire 10% on overdue accounts)
In case of overdue accounts (as at 29
th
Feb’20),
40% of customers have paid
their full dues while 25% have made partial payments.
Moratorium update:
As at end-Apr’20, 93% of its portfolio availed
moratorium, which includes 98.3% of total borrowers. The bank has encouraged
customers to opt for moratorium to help preserve liquidity.
Rural/semi-urban borrowers would be less impacted as 53% of the MFI, 50% of
Small business loans and 5% of the Vehicle portfolio are located in semi-urban/
rural locations.
Apr’20 is a complete washout with no disbursements made during the month.
On the collection front,
Apr’20 was weak while some collections started post 5
th
May’20.
Immediate top-up loans would be required by the MFI/ Small business
customers to normalize. Thus, it has launched ‘Bounce-Back Loan’ scheme for
top-up loans.
17 May 2020
3
 Motilal Oswal Financial Services
Equitas Holdings
Impact of recent measures announced by government
Measures announced for the MSME segment by the government:
Nearly
INR55b of exposure would qualify for an additional 20% loan facility covered
under the INR3t government guaranteed loan scheme.
Further, the government has announced interest subsidy on loans up to INR50k,
and thus, majority of MFI/ street vendors would benefit under this scheme.
Business segments
MFI Portfolio
More than 50% of customers in livestock/farming related businesses.
Post 3
rd
May’20, 60% of center meetings have started with 40-45% attendance.
Only evaluation of customer is being done with no payment collection
happening at center meetings.
Vehicle Finance
Downward cycle should continue as supply chain has got impacted
severely/broken.
Reducing LTVs in the commercial vehicle (CV) portfolio.
Heavy CV segment would remain vulnerable. Overall vehicle segment should see
higher delinquencies. Total exposure to heavy CVs is ~INR15b.
Higher focus on LCVs and Small CVs that depend on the local economy.
Exposure to passenger vehicles minimal.
MSE
Have contacted all 800 customers.
~16% customers engaged in healthcare, pharma, essential services, etc. have
been positively impacted while 17-18% should see negative impact.
Other customers would see minimal impact.
Small business loans
98% of customers have only single loan.
There are three ticket size categories – (a) up to INR0.5m, (b) INR0.5m to
INR1m, and (c) INR1m to INR2.5m. Majority of borrowers have exposure below
INR1m.
Balance sheet related
On the liability front,
acquired 20k new accounts in Apr’20.
Overall, the bank’s customer profile is very different from other banks. ~90% of
these customers cater to the informal segment.
Retail TD forms 50% of the total term deposits. Retail TD + CASA forms ~65% of
the total deposits.
17 May 2020
4
 Motilal Oswal Financial Services
Equitas Holdings
Key Exhibits
Exhibit 1: Share of micro finance portfolio declined to 23.5%
v/s 26.2% in FY19
Share of MFI (%)
4%
Exhibit 2: Vehicle finance and small business loans form
~65% of the total book
5%1%
MFI
24%
Small business loan
Vehicle finance
MSE
Corporate loans
41%
Others
Source: MOFSL, Company
24%
Source: MOFSL, Company
Exhibit 3: Credit cost trends
Credit Cost
Exhibit 4: Moratorium across segments (% by borrowers)
Business Segments
MFI
Small Business Loans
Housing Finance
Vehicle Finance
Working Capital
Corporate
Others
Total
Source: MOSL, Company
% of customers opting
for moratorium
100.0
87.3
71.5
89.6
93.0
3.4
91.8
98.3
Source: MOSL, Company
Exhibit 5: A trend of segmental GNPAs (%)
Segmental GNPA
MSE
Small business loans
Micro Finance
Vehicle Finance
Total
2QFY19
2.63
3.08
0.88
6.83
3.36
3QFY19
4.29
2.79
0.74
6.27
3.14
4QFY19
4.84
2.56
0.86
4.02
2.53
1QFY20
1.08
2.72
0.88
4.36
2.75
3QFY20
1.07
2.96
1.04
4.48
2.86
4QFY20
1.19
2.73
1.16
4.03
2.72
Valuation view
Asset quality to remain under pressure:
COVID-19 would severely impact
multiple segments due to the contagion effect. We expect potential increase in
delinquencies in the MFI/Business loans and the CV portfolio. Thus, we expect
slippage/credit cost trend to rise sharply to 4.5%/2.7% in FY21E.
Maintain Buy with target price of INR65:
EQUITAS has reported steady business
growth despite the lockdown in the last few days of Mar’20. It has also
increased the mix of non-MFI loans. Operating performance has remained
strong led by higher NII growth. Further, it has made higher COVID-19 provisions
as ~98% of borrowers have availed moratorium, which is significantly higher in
comparison to peers. Management has indicated that INR55b of loans would
quality for additional lending under the government’s MSME package; however,
we still remain cautious on EQUITAS’ asset quality. We estimate credit cost to
rise sharply to 2.7% for FY21E. We, thus, cut our PAT estimates by 45%/37% for
FY21/FY22E. We revise our TP to INR65 (0.8x FY22 ABV). Maintain Buy.
17 May 2020
5
 Motilal Oswal Financial Services
Equitas Holdings
Exhibit 6: We cut our PAT estimate for FY21/FY22 by 45%/37%, primarily to factor in higher credit cost, moderation in loan
growth & fee income trends
INR B
Net Interest Income
Other Income
Total Income
Operating Expenses
Operating Profit
Provisions
PBT
Tax
PAT
Loans
Deposits
Margins (%)
Credit Cost (%)
RoA (%)
RoE (%)
EPS
BV
ABV
FY21
16.2
3.6
19.8
13.4
6.4
2.4
3.9
1.0
2.9
179
139
7.7
1.4
1.4
10.4
8.6
87.0
79.6
Old Est.
FY22
20.3
4.3
24.6
16.5
8.1
2.6
5.6
1.4
4.2
227
181
7.8
1.2
1.5
13.2
12.2
96.9
88.8
FY21
16.0
3.0
19.0
12.8
6.2
4.0
2.2
0.5
1.6
155
123
8.2
2.7
0.8
5.8
4.7
83.9
75.6
Rev. Est.
FY22
17.8
3.4
21.1
14.2
6.9
3.5
3.5
0.9
2.6
180
145
8.0
2.0
1.1
8.8
7.6
89.1
78.5
Chg. (%)/bps
FY21
FY22
-0.9
-12.5
-16.5
-22.1
-3.8
-14.2
-4.3
-13.9
-2.6
-14.7
66.0
34.4
-44.9
-37.5
-44.9
-37.5
-44.9
-37.5
-13.4
-20.6
-11.6
-19.7
50
25
130
84
-56
-42
-457
-445
-45.0
-37.5
-3.6
-8.0
-5.0
-11.7
Exhibit 7: DuPont Analysis: Return ratios to remain under pressure in the near term
Interest Income
Interest Expense
Net Interest Income
Fee income
Trading and others
Other Income
Total Income
Operating Expenses
Employees
Others
Operating Profits
Core operating Profits
Provisions
NPA
Othes
PBT
Tax
RoA
Leverage (x)
RoE
FY16
19.2
8.1
11.11
1.23
0.21
1.44
12.56
6.65
4.32
2.33
5.91
5.69
1.09
0.77
0.33
4.81
1.72
3.09
4.3
13.3
FY17
18.3
7.5
10.86
1.11
0.34
1.45
12.31
7.81
5.08
2.73
4.50
4.16
1.31
1.25
0.06
3.20
1.17
2.02
4.4
8.9
FY18
14.1
5.8
8.24
1.47
0.00
1.47
9.70
8.07
4.80
3.26
1.64
1.64
1.42
0.22
1.20
0.22
0.17
0.05
5.1
0.2
FY19
14.4
6.6
7.87
1.93
0.00
1.93
9.81
6.89
3.77
3.13
2.91
2.91
0.70
0.70
0.00
2.21
0.77
1.44
6.5
9.3
FY20E
15.1
6.6
8.53
1.61
0.00
1.61
10.14
6.73
4.05
2.68
3.41
3.41
1.41
0.00
1.41
2.00
0.61
1.39
7.0
9.7
FY21E
13.8
5.9
7.85
1.19
0.28
1.46
9.31
6.28
3.82
2.46
3.03
2.76
1.97
1.93
0.04
1.06
0.27
0.79
7.3
5.8
FY22E
13.6
6.0
7.68
1.20
0.24
1.45
9.13
6.13
3.78
2.35
3.00
2.75
1.50
1.45
0.05
1.50
0.38
1.12
7.8
8.8
17 May 2020
6
 Motilal Oswal Financial Services
Equitas Holdings
Story in Charts
Exhibit 8: AUM grew 31%/5% YoY/QoQ to INR154b
83 83
65
50
7
8
15
32 36 38 42
32 33 37 31
3
0.6
37.5
24.8
27.1
AUM (INR b)
YoY Growth (%)
Exhibit 9: Share of Small Business loans inches up to 40.9%
MFI
Buisness loans
1.0
38.2
25.4
27.6
1.5
39.1
25.2
26.2
Vehicles
corp loans
2.3
40.6
24.5
25.3
3.3
40.5
24.5
24.2
Property fin
Others
3.9
40.6
24.5
24.0
4.4
40.9
24.5
23.5
66 71 72 72 70 73 77 82 93 100 107 117 123 132 146 154
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 10: NIMs trends over the last few quarters
Margins (On IEA) calc (%)
Exhibit 11: C/I ratio improved 410bp QoQ to 62.1%
9.6 10.0
8.3
CI ratio (%)
Cost to assets (%)
7.2 6.8
7.2 7.1 6.8 6.8 7.0
6.6
6.5
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 12: CASA ratio declined to 20.5% as TD growth was
higher than CASA growth
Deposit (INR b)
26
28
33
35
32
28
CASA ratio (%, RHS)
Exhibit 13: GNPA/NNPA ratio improved by 14bp/7bp QoQ;
PCR improved to 45.2%
5.8
4.9
5.0
3.2
1.6
2.7 2.8
1.5
47
1.5
47
3.4 3.1
2.0
41
2.9 2.9 2.7
2.5 2.8
1.7 1.7
44
45
PCR (%)
GNPA (%)
NNPA (%)
25
25
24
22
21
20
3.0
1.8 1.4 1.6 1.6
44
43
44
44
23
31
37
47
57
70
79
90
91 100 105 108
46
46
67
Source: MOFSL, Company
Source: MOFSL, Company
17 May 2020
7
 Motilal Oswal Financial Services
Equitas Holdings
Financials and Valuations
Income Statement
Y/E March
Interest Income
Interest Expense
Net Interest Income
Growth (%)
Non Interest Income
Total Income
Growth (%)
Operating Expenses
Pre Provision Profits
Growth (%)
Core PPoP
Growth (%)
Provisions (excl tax)
PBT
Tax
Tax Rate (%)
PAT
Growth (%)
FY16
10,368
4,359
6,009
69.3
781
6,790
47.2
3,597
3,193
49.2
3,077
48.2
591
2,602
930
35.7
1,672
56.8
FY17
14,426
5,871
8,555
42.4
1,140
9,695
42.8
6,150
3,545
11.0
3,279
6.6
1,029
2,516
922
36.6
1,594
-4.7
FY18
16,120
6,691
9,428
10.2
1,677
11,106
14.5
9,233
1,873
-47.2
1,873
-42.9
1,621
252
198
78.5
54
-96.6
FY19
21,119
9,602
11,517
22.2
2,829
14,346
29.2
10,085
4,261
127.5
4,261
127.5
1,024
3,237
1,132
35.0
2,106
3,775.3
FY20
26,454
11,501
14,953
29.8
2,824
17,777
23.9
11,801
5,976
40.2
5,976
40.2
2,466
3,509
1,073
30.6
2,436
15.7
FY21E
28,165
12,116
16,049
7.3
2,993
19,042
7.1
12,840
6,202
3.8
5,636
-5.7
4,033
2,169
546
25.2
1,623
-33.4
(INR m)
FY22E
31,530
13,764
17,766
10.7
3,352
21,118
10.9
14,179
6,938
11.9
6,372
13.1
3,467
3,471
874
25.2
2,597
60.0
Balance Sheet
Y/E March
Equity Share Capital
Reserves & Surplus
Net Worth
Deposits
Growth (%)
of which CASA Dep
Growth (%)
Borrowings
Other Liabilities & Prov.
Total Liabilities
Current Assets
Investments
Growth (%)
Loans
Growth (%)
Fixed Assets
Other Assets
Total Assets
Asset Quality
GNPA (INR m)
NNPA (INR m)
GNPA Ratio
NNPA Ratio
Slippage Ratio
Credit Cost
PCR (Excl Tech. write off)
FY16
2,699
10,714
13,413
FY17
3,378
18,928
22,306
18,850
3,320
46,579
3,497
63,489
9,469
119
-93.2
50,702
46.3
623
2,576
63,489
FY16
681
478
1.34
0.94
0.72
0.97
29.8
46,579
6,264
93,999
10,642
18,959
15,831.9
58,351
15.1
3,288
2,759
93,999
FY17
2,060
860
3.46
1.47
2.53
1.80
58.3
FY18
3,404
19,359
22,763
47,190
150.3
16,340
392.2
58,877
6,118
134,948
11,940
38,569
103.4
78,001
33.7
3,304
3,133
134,947
FY18
2,125
1,126
2.69
1.44
4.89
1.67
47.0
FY19
3,415
19,129
22,543
90,067
90.9
22,720
39.0
39,730
5,286
157,627
12,606
23,445
-39.2
115,950
48.7
2,373
3,253
157,627
FY19
2,957
1,674
2.52
1.44
3.27
0.81
43.4
FY20
3,418
24,024
27,441
107,884
19.8
22,082
-2.8
51,349
6,471
193,145
25,368
23,425
-0.1
137,472
18.6
2,128
4,752
193,145
FY20
4,173
2,286
2.99
1.66
3.23
1.68
45.2
FY21E
3,418
25,247
28,665
122,988
14.0
29,517
33.7
56,484
7,571
215,708
23,331
28,110
20.0
155,344
13.0
2,996
5,927
215,708
FY21E
7,840
4,017
4.93
2.59
4.50
2.70
48.8
FY22E
3,418
27,045
30,463
145,126
18.0
37,733
27.8
62,132
9,237
246,957
22,798
33,170
18.0
180,199
16.0
3,295
7,495
246,957
FY22E
9,792
5,196
5.30
2.88
3.50
2.00
46.9
17 May 2020
8
 Motilal Oswal Financial Services
Equitas Holdings
Financials and Valuations
Ratios
Y/E March
Yield and Cost Ratio (%)
Avg. Yield- on Earning Assets
Avg. Yield on loans
Avg. Yield on Investments
Avg. Cost of Int. Bear. Liab.
Interest Spread
NIM (on IEA)
Business and Efficiency Ratios (%)
Loans/Deposit Ratio
CASA Ratio
Cost/Assets
Cost/Total Income
Cost/Core income
Int. Expense/Int.Income
Fee Income/Total Income
Non Int. Inc./Total Income
Empl. Cost/Total Expense
Investment/Deposit Ratio
RoE
RoA
Book Value (INR)
Growth (%)
Price-BV (x)
Adjusted BV (INR)
Price-ABV (x)
EPS (INR)
Growth (%)
Price-Earnings (x)
E: MOSL Estimates
FY16
20.3
24.0
12.4
11.2
9.0
11.8
NM
NM
5.7
53.0
53.9
42.0
9.8
11.5
65.0
NM
13.3
3.1
49.7
14.1
48.5
6.2
-0.6
FY17
19.5
25.9
2.0
10.5
9.0
11.5
309.6
17.6
6.5
63.4
65.2
40.7
9.0
11.8
65.0
100.6
8.9
2.0
66.0
32.9
64.3
5.2
-15.5
9.5
FY18
14.9
20.6
7.2
7.8
7.1
8.7
165.3
34.6
6.8
83.1
83.1
41.5
15.1
15.1
59.6
81.7
0.2
0.0
66.9
1.3
0.7
64.6
0.8
0.2
-96.9
310.2
FY19
15.1
18.8
8.3
8.1
6.9
8.2
128.7
25.2
6.4
70.3
70.3
45.5
19.7
19.7
54.7
26.0
9.3
1.4
66.0
-1.3
0.8
62.6
0.8
6.2
3,754.5
8.0
FY20
15.6
19.1
6.7
8.0
7.7
8.8
127.4
20.5
6.1
66.4
66.4
43.5
15.9
15.9
60.1
21.7
9.7
1.4
80.3
21.6
0.6
75.6
0.7
7.1
15.5
7.0
FY21E
14.3
18.0
6.8
7.2
7.2
8.2
126.3
24.0
6.0
67.4
69.5
43.0
12.7
15.7
60.8
22.9
5.8
0.8
83.9
4.5
0.6
75.6
0.7
4.7
-33.4
10.5
FY22E
14.2
17.5
6.7
7.1
7.1
8.0
124.2
26.0
5.7
67.1
69.0
43.7
13.2
15.9
61.7
22.9
8.8
1.1
89.1
6.3
0.6
78.5
0.6
7.6
60.0
6.5
Profitability Ratios and Valuation
17 May 2020
9
 Motilal Oswal Financial Services
Equitas Holdings
NOTES
17 May 2020
10
 Motilal Oswal Financial Services
Equitas Holdings
Explanation of Investment Rating
Investment Rating
Expected return (over 12-month)
BUY
>=15%
SELL
< - 10%
NEUTRAL
< - 10 % to 15%
UNDER REVIEW
Rating may undergo a change
NOT RATED
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall within
following 30 days take appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the
Regulations, is engaged in the business of providing Stock broking services, Investment Advisory Services, Depository participant services & distribution of various financial
products. MOFSL is a subsidiary company of Passionate Investment Management Pvt. Ltd.. (PIMPL). MOFSL is a listed public company, the details in respect of which are
available on www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a
registered Trading Member with National Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and
National Commodity & Derivatives Exchange Limited (NCDEX) for its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National
Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance
Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of associate entities of Motilal Oswal Financial Services Limited are
available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and
buy or sell the securities or derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other
compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have
any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the
specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even
though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report
should be aware that MOFSL may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific
merchant banking, investment banking or brokerage service transactions. Details of pending Enquiry Proceedings of Motilal Oswal Financial Services Limited are available on the
website at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental
research and Technical Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated
from MOFSL research activity and therefore it can have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability
or use would be contrary to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong
Kong Securities and Futures Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst
Regulations) 2014 Motilal Oswal Securities (SEBI Reg No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of
research report in Hong Kong. This report is intended for distribution only to “Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity
to which this document relates is only available to professional investor and will be engaged only with professional investors.” Nothing here is an offer or solicitation of these
securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian Analyst(s) who compile this report is/are not
located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under
applicable state laws in the United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers
Act" and together with the 1934 Act, the "Acts), and under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any
brokerage and investment services provided by MOFSL , including the products and services described herein are not available to or intended for U.S. persons. This report is
intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act and interpretations thereof by SEC (henceforth referred to as
"major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any investment or investment activity to which
this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption from registration
provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by the U.S. Securities and Exchange
Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-
dealer, Motilal Oswal Securities International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this
chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S.
registered broker-dealer, MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public
appearances and trading securities held by a research analyst account.
For Singapore
In Singapore, this report is being distributed by Motilal Oswal Capital Markets Singapore Pte Ltd (“MOCMSPL”) (Co.Reg. NO. 201129401Z) which is a holder of a capital markets
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SFA”). Accordingly, if a Singapore person is not or ceases to be such an institutional investor, such Singapore Person must immediately discontinue any use of this Report and
inform MOCMSPL.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
17 May 2020
11
 Motilal Oswal Financial Services
Equitas Holdings
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
-
financial interest in the subject company
-
actual/beneficial ownership of 1% or more securities in the subject company
-
received compensation/other benefits from the subject company in the past 12 months
-
other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on
the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL
even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
-
acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
-
be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the
company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies)
-
received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not
consider demat accounts which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from
clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the
research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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This report has been prepared by MOFSL and is meant for sole use by the recipient and not for circulation. The report and information contained herein is strictly confidential and
may not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written consent
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instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not treat recipients as
customers by virtue of their receiving this report.
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The report and information contained herein is strictly confidential and meant solely for the selected recipient and may not be altered in any way, transmitted to, copied or
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in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to your specific circumstances.
The securities discussed and opinions expressed in this report may not be suitable for all investors, who must make their own investment decisions, based on their own investment
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the information and opinions contained in this document. The Disclosures of Interest Statement incorporated in this document is provided solely to enhance the transparency and
should not be treated as endorsement of the views expressed in the report. This information is subject to change without any prior notice. The Company reserves the right to make
modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its associates, their directors and the employees may from
time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document. They may perform or seek to
perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as a
separate, distinct and independent of each other. The recipient should take this into account before interpreting the document. This report has been prepared on the basis of
information that is already available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or
may not subscribe to all the views expressed therein. This document is being supplied to you solely for your information and may not be reproduced, redistributed or passed on,
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entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution, publication, availability or use would be contrary to law,
regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities described herein may or may not be eligible for sale in
all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to observe such restriction.
Neither the Firm, not its directors, employees, agents or representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost
revenue or lost profits that may arise from or in connection with the use of the information.
The person accessing this information specifically agrees to exempt MOFSL or any of its
affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such
misuse and further agrees to hold MOFSL or any of its affiliates or employees free and harmless from all losses, costs, damages,
expenses that may be suffered by the person
accessing this information due to any errors and delays.
Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 71934200/ 022-71934263;
Website www.motilaloswal.com.CIN no.: L67190MH2005PLC153397.Correspondence Office Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road,
Malad(West), Mumbai- 400 064. Tel No: 022 7188 1000.
Registration Nos.: Motilal Oswal Financial Services Limited (MOFSL)*: INZ000158836(BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst:
INH000000412. AMFI: ARN - 146822; Investment Adviser: INA000007100; Insurance Corporate Agent: CA0579;PMS:INP000006712. Motilal Oswal Asset Management Company
Ltd. (MOAMC): PMS (Registration No.: INP000000670); PMS and Mutual Funds are offered through MOAMC which is group company of MOFSL. Motilal Oswal Wealth
Management Ltd. (MOWML): PMS (Registration No.: INP000004409) is offered through MOWML, which is a group company of MOFSL. Motilal Oswal Financial Services Limited is
a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs,Insurance Products and IPOs.Real Estate is offered through Motilal Oswal Real Estate Investment Advisors II Pvt.
Ltd. which is a group company of MOFSL. Private Equity is offered through Motilal Oswal Private Equity Investment Advisors Pvt. Ltd which is a group company of MOFSL.
Research & Advisory services is backed by proper research. Please read the Risk Disclosure Document prescribed by the Stock Exchanges carefully before investing. There is no
assurance or guarantee of the returns. Investment in securities market is subject to market risk, read all the related documents carefully before investing. Details of Compliance
Officer: Name: Neeraj Agarwal, Email ID: na@motilaloswal.com, Contact No.:022-71881085.
* MOSL has been amalgamated with Motilal Oswal Financial Services Limited (MOFSL) w.e.f August 21, 2018 pursuant to order dated July 30, 2018 issued by Hon'ble National
Company Law Tribunal, Mumbai Bench.
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