Shriram City Union Finance
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)
SCUF IN
66
100.2 / 1.4
1640 / 617
9/56/62
59
3 May 2021
4QFY21 Results Update | Sector: Financials
CMP: INR1,519
TP: INR1,900 (+25%)
Buy
Stable performance on asset quality; disbursements recover
SCUF posted a 4QFY21 PAT of INR2.8b (up 84% off a low base YoY; 7% miss).
The miss was driven by NII (8% miss), but was offset by lower credit costs
(15% beat). In FY21, PPOP and PAT were largely flat YoY at INR22b/INR10b.
We lower our FY22E EPS estimate by ~7% to factor in lower topline growth.
The company should deliver RoE/RoA of ~16%/4% in FY23E.
We maintain
our Buy rating with a TP of INR1,900 per share (1.2x FY23E BVPS).
In 4QFY21, disbursements across most products were back to pre-COVID
levels. MSME disbursements recovered to pre-COVID levels (INR18b), while
those in 2W were 30% higher. SCUF commenced LAP (AUM of INR1.9b) in
4QFY21. Until now, it was in the pilot phase.
As a result of healthy disbursements, AUM grew 4% QoQ to INR296b. As
MSME financing has taken a back seat in the past few quarters, its share has
declined by over 600bp to 51% over the past year.
In the HFC segment, loan book grew ~70% YoY to INR39.3b. GNPL ratio
improved 53bp QoQ to 1.9%.
GNPL ratio improved 10bp QoQ to 6.4%, driven by most products. SCUF
reversed some provisions in 4QFY21 – standard asset provisions declined
40bp to 3.8%, while NPL provisions were stable at 53%. Cumulative
provisioning of 6.9% of loans is among the highest in our NBFC coverage
universe.
Cost of funds has stabilized at 9.1-9.2% over the past two quarters.
Calculated yields (on AUM) stand at 19.5% (down 40bp QoQ). Spreads
declined by 30bp QoQ to 10.4%.
With a 6-7% hit rate among eligible customers, the management expects
INR6-7b of Personal loan disbursements per quarter going forward.
From June onwards, it expects 18-20% QoQ growth in the SME segment.
SCUF (standalone) – 0dpd: 60%, 1-30dpd: 26%, Stage 2: 7.93%.
HFC – 1-30dpd: 7.2% and Stage 2: 3.2%. For new accounts disbursed in the
past two years, over 30dpd stands at 0.4%.
Disbursements stable sequentially; AUM up ~4% QoQ
Financials & Valuations (INR b)
Y/E March
2021 2022E
NII
34.4
36.2
PPP
22.4
24.2
PAT
10.1
11.9
EPS (INR)
153
180
EPS Gr. (%)
1
17
BV/Sh. (INR)
1,230 1,380
Ratios
NIM (%)
11.7
11.7
C/I ratio (%)
37.8
37.3
RoA (%)
3.1
3.4
RoE (%)
13.2
13.8
Payout (%)
25.9
16.7
Valuations
P/E (x)
9.9
8.5
P/BV (x)
1.2
1.1
Div. Yield (%)
2.2
1.6
2023E
42.0
29.3
15.4
233
30
1,583
12.2
34.6
4.1
15.7
12.9
6.5
1.0
1.6
Asset quality stable and provision buffer lower
Shareholding pattern (%)
As On
Mar-21 Dec-20 Mar-20
Promoter
34.6
34.6
33.9
DII
3.5
3.9
6.0
FII
28.5
28.0
27.4
Others
33.4
33.5
32.8
FII Includes depository receipts
Highlights from the management interaction
Valuation and view
Since the IL&FS crisis, it has faced issues on the liability front, which led to
muted disbursements and loan book growth. However, better availability of
debt capital has led to disbursements exceeding pre-COVID levels. In FY22E,
disbursements should largely return back to normal levels, though we expect it
to be a bit lower in MSME financing. Performance on the asset quality front has
exceeded expectations. We now expect credit costs ~2.5% in FY22E/FY23E. We
decrease our FY22E EPS estimate by 7% to factor in lower topline. We
maintain
our Buy rating with a TP of INR1,900 per share (1.2x FY23E BVPS).
Research Analyst: Piran Engineer
(Piran.Engineer@MotilalOswal.com) |
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com)
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com) |
Divya Maheshwari
(Divya.Maheshwari@motilaloswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.