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.
 Motilal Oswal Financial Services
Shriram City Union Finance
Quarterly Performance
Y/E MARCH
INR m
Act v/s
4QFY21E
Est. (%)
14,470 -2.3
5,196 7.0
9,274 -7.5
9.2
568 26.1
9,841 -5.5
9.3
3,793 -0.3
6,048 -8.8
17.6
1,932 -15.2
4,116 -5.8
1,088 -2.9
3,028 -6.8
97.8
Interest Income
Interest expenses
Net Interest Income
Y-o-Y Growth (%)
Fees and Other Income
Net Operating Income
Y-o-Y Growth (%)
Operating Expenses
Operating Profit
Y-o-Y Growth (%)
Provisions
Profit before Tax
Tax Provisions
Net Profit
Y-o-Y Growth (%)
Key Operating Parameters (%)
Yield on loans (calc., %)
19.3
Cost of funds (calc., %)
9.5
Spreads (%)
9.8
Cost to Income Ratio (%)
39.6
Credit cost (calc., %)
2.6
Tax Rate (%)
34.1
Balance Sheet Parameters
Disbursements (INR b)
62.8
Growth (%)
-2.1
AUM (INR b)
303.5
Growth (%)
4.5
Repayments (INR b)
55.1
Rep. rate (annualized, %)
74.4
Borrowings/AUM ratio (%)
73.2
Asset Quality Parameters (%)
Gross Stage 3 (INR b)
26.5
Gross Stage 3 ratio (%)
8.9
Net Stage 3 (INR b)
15.0
Net Stage 3 ratio (%)
5.4
ECL Stage 3 (INR b)
11.5
PCR (%)
43.4
Segmental GS3 ratio (%)
9.3
SME loans
9.4
2-wheeler
2.3
Gold loans
11.3
Personal Loans
Auto loans
11.78
Return ratios (Cumulative, Rep. %)
RoA
3.4
RoE
15.4
Others
CRAR (%)
22.62
Shriram HFC AUM (INR b)
19.3
1Q
14,449
5,316
9,134
-1.3
423
9,557
2.1
3,783
5,774
1.6
1,933
3,841
1,309
2,532
10.3
FY20
2Q
3Q
14,361 14,174
5,359
5,296
9,002
8,877
-7.8
-0.6
541
525
9,543
9,402
-6.5
1.7
3,799
3,675
5,744
5,727
-8.0
2.3
1,969
1,822
3,775
3,905
800
937
2,975
2,968
19.3
14.7
19.1
9.8
9.3
39.8
2.6
21.2
52.0
-19.6
297.2
0.5
58.3
76.8
72.0
25.2
8.7
14.2
5.3
10.9
43.5
9.0
9.1
2.8
10.9
12.1
3.8
16.7
24.4
18.8
19.1
9.8
9.4
39.1
2.5
24.0
58.2
27.0
295.5
3.1
60.0
80.7
74.6
24.6
8.5
13.9
5.1
10.7
43.6
8.9
8.9
3.4
11.0
9.1
4.0
17.1
25.3
21.0
4Q
13,988
5,499
8,488
-5.4
514
9,002
-3.9
3,859
5,143
-10.4
3,114
2,029
498
1,531
-39.1
19.1
9.7
9.4
42.9
4.2
24.6
54.2
-18.1
290.9
-1.7
58.8
79.6
79.6
22.6
7.9
11.7
4.4
11.0
48.5
8.3
8.1
4.4
11.1
5.4
2.0
8.6
27.7
23.0
1Q
13,899
5,375
8,525
-6.7
246
8,771
-8.2
3,105
5,666
-1.9
3,102
2,564
642
1,923
-24.1
19.3
9.6
9.7
35.4
4.3
25.0
13.3
-78.9
284.5
-6.3
19.7
27.0
76.2
20.5
7.3
10.2
3.9
10.3
50.4
7.8
6.8
4.4
11.7
0
2.5
10.5
28.8
23.7
FY21
2Q
3Q
13,698 13,978
5,190
5,215
8,508
8,763
-5.5
-1.3
293
414
8,801
9,177
-7.8
-2.4
3,182
3,575
5,619
5,602
-2.2
-2.2
2,015
1,755
3,604
3,847
1,035
1,050
2,569
2,797
-13.7
-5.8
19.6
9.6
10.0
36.2
2.9
28.7
30.6
-41.1
275.4
-7.4
39.7
55.8
79.1
18.2
6.7
8.3
3.3
9.9
54.3
7.5
5.9
3.5
10.9
0.0
2.9
12.1
30.1
27.2
19.9
9.2
10.7
39.0
2.5
27.3
62.0
6.5
285.5
-3.4
51.9
75.4
81.9
18.3
6.5
8.7
3.3
9.7
52.7
7.4
5.8
3.0
10.7
0.0
3.1
12.9
29.6
31.4
4Q
14,140
5,559
8,581
1.1
716
9,297
3.3
3,781
5,516
7.2
1,638
3,878
1,057
2,821
84.3
19.5
9.1
10.4
40.7
2.3
27.3
65.7
21.3
295.7
1.7
55.4
77.7
86.5
18.8
6.4
8.8
3.2
10.0
53.3
7.3
5.8
2.9
10.5
0.0
3.1
13.2
28.6
39.3
FY20
56,972
21,470
35,501
-3.8
2,003
37,504
-1.8
15,116
22,388
-3.8
8,837
13,551
3,545
10,007
1.2
19.7
9.4
10.3
40.2
3.0
26.2
227.1
-5.7
290.9
-1.7
232.1
78.5
79.6
22.6
7.9
11.7
4.4
11.0
48.5
FY21
55,716
21,339
34,377
-3.2
1,669
36,046
-3.9
13,644
22,402
0.1
8,509
13,893
3,785
10,109
1.0
19.4
8.9
10.5
37.8
2.9
27.2
167.3
-26.3
296.0
1.8
162.1
55.7
86.4
22.6
8.3
11.6
4.2
11.0
48.6
3.3
14.7
3.1
13.2
3 May 2021
2
 Motilal Oswal Financial Services
Shriram City Union Finance
Highlights from the management interaction
Business updates
SCUF experienced lower disbursement/collection efficiency in Apr’21. The
management said disbursement will be based on cash flow visibility only and
that it will remain cautious in first three weeks of May’21.
The LAP product was introduced to tap long tenured and higher ticket size loans
(max tenure 84 months, ideal ATS at INR3.5m, 16-18% yield). Micro loans are
disbursed as a sub-part of MSME loans.
Some initiatives taken by its HFC subsidiary: a) built a strong management team,
b) cut down the number of states to six (Andhra Pradesh/Telangana, Tamil
Nadu, Maharashtra, Gujarat, Rajasthan, Delhi) from 17-18, c) redefined
customer segment (affordable housing in South India and mid ticket segment in
Maharashtra and Delhi), and d) stopped making any advances to a customer
who is in any arrears or in default.
It will infuse INR5b as capital into the HFC over two years (INR2b in FY22).
Incremental origination is targeted towards existing customers only. Top-up
loans currently at 4-5% of monthly disbursements.
Opex has inched up due to pick up in business activity.
Restructured loan book stands at INR1.53b. It has sanctioned and disbursed
loans worth INR760m under the ECLG scheme till date.
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%.
Stage 3 stands over 6% for both moratorium and non-moratorium customers.
In the new book (originated over the last 27 months), NPA stands at 0.7%, with
the bounce rate less than 9.5%.
Asset quality
Funding
Direct assignments in FY21 at INR3.04b (FY20: INR29.4b).
SCUF was able to raise 8-10 year funds from pension funds and institutions.
Guidance:
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.
It is likely to a carry similar (~INR40b) liquidity levels going forward.
HFC subsidiary: If current cost efficiency were to be maintained, the
management is positive of delivering 3% RoA and 15-18% RoE.
It is confident of maintaining credit costs at current levels.
The management said the assigned pool will not be more than 10-15% of book
going forward. The DA book may be static or reduce further.
C/I ratio is likely to be less than 40%.
3 May 2021
3
 Motilal Oswal Financial Services
Shriram City Union Finance
Others:
In Andhra Pradesh/Telangana and Tamil Nadu, 2Ws constitute 15% each of
portfolio mix. For SME, it would be 18-20% in Tamil Nadu and 25-30% in Andhra
Pradesh/Telangana.
ATS classification: Micro loans at INR0.1-0.5m and Medium loans at INR0.5-2m.
Above INR2.5m would be a large tick size.
There were ~9% customer foreclosures in the HFC segment in FY21.
Other income is largely income from DA. The latter is a function of liquidity for
the company.
The management said any customer who has completed 60-70% of his/her loan
is eligible for top-up loans.
Around 3-4%/8-10% of its SME/Personal loans customers would be having more
than one loan. The management said the second Personal loan was mostly for
2Ws.
The company is a sole lender to 60-70% of its customers. Funds lend to them
would be 15-20% of their total capital employed.
In South India, the company is predominantly in Tamil Nadu and Andhra
Pradesh/Telangana. It has a small presence in Kerala.
LAP yields to be 16-18% going forward.
Key exhibits
Exhibit 1: Disbursements up 21% YoY
Disbursements (INR b)
0
-2
27
-20
-18
-79
66
63
52
58
54
13
31
62
66
13.2
12.8
12.5
18.9
11.8
6.5
-41
8.8
20.6
15.4
YoY Growth (%)
6
21
Exhibit 2: 2W disbursements up 30% YoY
2W disbursements (INR b)
Source: MOFSL, Company
Source: MOFSL, Company
Exhibit 3: AUM picks up
AUM (INR b)
7.3
4.5
0.5
3.1
YoY Growth (%)
1.7
Exhibit 4: Share of SME down 270bp sequentially (%)
Gold
18.2 18.1
8.7
9.2
4.0 3.7
60.0
59.0
10.1
Small Business
18.6 20.9
9.9
8.2
3.1 3.8
58.7
9.9
57.4
9.7
Auto
20.9
6.4
4.7
57.3
10.7
PL*
2W*
23.4
5.5
5.5
53.7
11.8
LAP
0.6
23.3
6.8
5.5
51.0
12.8
-1.7
-6.3
-7.4
-3.4
21.2 21.3
4.8
5.6
4.6 4.8
58.4
10.3
58.2
10.9
295.8 303.5 297.2 295.5 290.9 284.5 275.4 285.5 295.7
9.2
Source: MOFSL, Company
Source: MOFSL, Company, PL: Personal loan, 2W: Two-Wheeler
3 May 2021
4
 Motilal Oswal Financial Services
Shriram City Union Finance
Exhibit 5: Spreads down 30bp QoQ (%)
19.2
19.3
19.1
Yields*
19.1 19.1
CoF
19.3 19.6
19.9
19.5
Exhibit 6: Borrowing mix (%)
13.0
Retail
Inst NCD & SD
Public NCD
22.0
8.9
9.5
9.8
9.8
9.7
9.6
9.6
9.2
9.1
48.0
13.0
3.0
Term Loans
Securitisation
Source: MOFSL, Company,*on AUM
Source: MOFSL, Company
Exhibit 7: Asset quality improves
GS3(%)
43.6
43.4
43.5
PCR (%)
43.6
48.5
50.4
54.3
52.7
53.3
8.9
FY19
8.9
1QFY20
8.7
1HFY20
8.5
9MFY20
7.9
FY20
7.3
1QFY21
6.7
1HFY21
6.5
9MFY21
6.4
FY21
Source: MOFSL, Company
Exhibit 8: Stable asset quality in SME/2W (%)
SME GS3(%)
9.6
9.4
9.1
8.9
2W GS3 (%)
Exhibit 9: Credit cost now at 2.3% of AUM
Credit costs (% 4.3AUM)
of
4.2
2.5
2.6
2.6
2.5
2.9
2.5
8.1
6.8
7.8
5.9
7.5
2.3
5.8
7.4
5.8
7.3
9.2
9.3
9.0
8.9
8.3
Exhibit 10: Trend in PAT (INR m)
Exhibit 11: RoE/RoAUM (%)
16.0
15.5
17.7
17.1
RoE
13.6
8.6
3.5
3.4
4.0
4.0
2.1
10.5
2.7
3.7
4.0
3.9
RoAUM
14.4
14.0
Source: MOFSL, Company
Source: MOFSL, Company
3 May 2021
5
 Motilal Oswal Financial Services
Shriram City Union Finance
Exhibit 12: AUM growth for the HFC subsidiary picks up
AUM (INR b)
22
25
4
5
-3
18.8
21.0
YoY Growth (%)
45
23
2.2
23.0
23.7
27.2
31.4
39.3
2.3
2.4
2.1
49
71
2.8
2.9
3.0
Exhibit 13: Asset quality in HFC subsidiary improves (%)
GS3
2.7
2.4
NS3
2.4
1.9
1.9
2.3
2.2
1.9
1.8
1.8
1.5
18.5
19.3
Source: MOFSL, Company
Source: MOFSL, Company
Valuation and view
Over the past two years, SCUF has overhauled its MSME underwriting model. It
has standardized its sourcing and underwriting process across regions. This has
started to reflect in improving asset quality trends. Over the past two years, the
GNPL ratio has declined to 6.4% from 8.9%.
Since the IL&FS crisis, it has faced issues on the liability front. It has increased its
securitization program to improve funding and kept additional liquidity on the
Balance Sheet.
With liquidity easing after the lifting of the moratorium on term loan EMIs,
disbursements have risen above pre-COVID levels. While the company may face
disbursement hurdles in 1QFY22 due to partial lockdowns in some states, it
should return on track in the remaining three quarters.
Hence, we forecast
8%/14% AUM growth in FY22E/FY23E.
Asset quality has been improving over the past few quarters.
Given the
encouraging collection efficiency trend and adequate provisioning in the
Balance Sheet, we expect credit costs to normalize to 2.6/2.4% in
FY22E/FY23E.
As a result, SCUF is on track to deliver 4% RoA/16% RoE in FY23E.
However, we cut our EPS estimates by 6-7% to factor in lower loan growth and
NIM. We maintain our Buy rating with a TP of INR1,900 per share (1.2x FY23E
BVPS).
3 May 2021
6
 Motilal Oswal Financial Services
Shriram City Union Finance
Exhibit 14: Downgrade EPS estimate by 7% to factor in lower topline and loan growth
INR b
NII
Other Income
Total Income
Operating Expenses
Operating Profit
Provisions
PBT
Tax
PAT
Loans
Borrowings
Margin
Credit Cost
RoA
RoE
Old estimate
FY22E
FY23E
38.6
45.1
1.9
2.4
40.5
47.4
14.6
15.9
26.0
31.5
8.7
9.5
17.2
22.0
4.5
5.7
12.7
16.3
305
351
250
277
12.4
12.8
2.8
2.7
3.8
4.5
14.6
16.2
New estimate
FY22E
FY23E
36.2
42.0
2.5
2.9
38.7
44.8
14.4
15.5
24.2
29.3
8.0
8.2
16.2
21.1
4.4
5.7
11.9
15.4
297
340
265
289
11.7
12.2
2.6
2.4
3.4
4.1
13.8
15.7
Change (%)
FY22E
FY23E
-6.4
-6.9
31.7
21.1
-4.6
-5.5
-1.0
-2.5
-6.6
-7.0
-8.2
-13.4
-5.7
-4.3
-2.1
-0.6
-7.0
-5.6
-2.4
-3.2
5.9
4.1
Source: MOFSL, Company
Exhibit 15: One-year forward P/B
P/B (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
3.2
Exhibit 16: One-year forward P/E
4.0
3.0
2.0
1.0
1.2
1.0
0.0
0.5
P/B (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
3.2
2.5
1.9
1.0
4.0
3.0
2.0
1.0
0.0
2.5
1.9
1.2
0.5
Source: MOFSL, Company
Source: MOFSL, Company
3 May 2021
7
 Motilal Oswal Financial Services
Shriram City Union Finance
Financials and valuations
Income Statement
Y/E March
Interest Income
Interest Expense
Net Interest income
Change (%)
Fee and Other Income
Total Income
Change (%)
Employee Cost
Other Operating Exp.
Operating Income
Change (%)
Total Provisions
% to operating income
PBT
Tax
Tax Rate (%)
PAT
Change (%)
Proposed Dividend
E: MOSL estimates
Balance Sheet
Y/E March
Capital
Reserves and Surplus
Net Worth
Borrowings
Change (%)
Total Liabilities
Investments
Change (%)
Loans
Change (%)
Net Fixed Assets
Net Current Assets
Total Assets
E: MOFSL estimates
FY17
43,344
15,344
28,000
20.5
549
29,001
20.1
5,503
5,857
17,642
29.3
9,105
51.6
8,536
2,976
34.9
5,561
5.0
989
FY18
50,840
16,641
34,199
22.1
744
34,943
20.5
7,063
6,764
21,116
19.7
10,232
48.5
10,885
3,775
34.7
7,109
27.9
1,187
FY19
56,564
19,862
36,702
7.3
1,249
37,951
8.6
8,379
6,548
23,024
9.0
7,821
34.0
15,203
5,314
35.0
9,889
39.1
1,452
FY20
56,972
21,402
35,569
-3.1
1,901
37,471
-1.3
8,477
6,607
22,387
-2.8
8,837
39.5
13,550
3,545
26.2
10,005
1.2
396
FY21
55,716
21,339
34,377
-3.4
1,669
36,046
-3.8
7,637
6,007
22,403
0.1
8,509
38.0
13,894
3,785
27.2
10,109
1.0
2,178
FY22E
58,790
22,639
36,151
5.2
2,503
38,654
7.2
7,942
6,463
24,249
8.2
8,012
33.0
16,237
4,384
27.0
11,853
17.2
1,650
FY23E
65,486
23,528
41,957
16.1
2,879
44,836
16.0
8,577
6,955
29,304
20.8
8,241
28.1
21,063
5,687
27.0
15,376
29.7
1,650
(INR m)
FY24E
74,812
25,832
48,980
16.7
3,310
52,290
16.6
9,264
7,485
35,542
21.3
9,424
26.5
26,118
7,052
27.0
19,066
24.0
1,650
(INR m)
FY24E
660
1,20,874
1,21,551
3,19,001
10.4
4,40,552
11,777
5.0
3,88,727
14.5
-626
40,674
4,40,552
FY17
659
49,029
49,688
1,80,397
25.2
2,30,085
7,131
-10.0
2,16,487
13.1
782
6,945
2,31,345
FY18
660
54,887
55,563
2,14,011
18.6
2,69,574
7,355
3.1
2,57,873
19.1
789
6,074
2,72,091
FY19
660
63,253
63,930
2,25,707
5.5
2,89,637
8,662
17.8
2,69,891
4.7
808
13,326
2,92,687
FY20
660
71,420
72,096
2,31,659
2.6
3,03,754
7,341
-15.2
2,66,125
-1.4
2,292
31,131
3,06,890
FY21
660
80,525
81,202
2,55,653
10.4
3,36,855
10,173
38.6
2,74,201
3.0
2,226
53,425
3,40,026
FY22E
660
90,396
91,073
2,64,791
3.6
3,55,863
10,682
5.0
2,97,271
8.4
179
47,732
3,55,863
FY23E
660
1,03,790
1,04,467
2,88,821
9.1
3,93,288
11,216
5.0
3,39,517
14.2
-201
42,756
3,93,288
3 May 2021
8
 Motilal Oswal Financial Services
Shriram City Union Finance
Financials and valuations
Ratios
Y/E March
Spreads Analysis (%)
Yield on loans
Cost of funds
Interest Spread
NIMs on AUM
Profitability Ratios (%)
RoE
RoA
Int. Expended/Int. Earned
Other Inc. /Net Income
Efficiency Ratios (%)
Op. Exps./Net Income
Empl. Cost/Op. Exps.
Asset-Liability Profile (%)
Loans/Borrowings Ratio
Leverage
Average leverage
Valuations
Book Value (INR)
BV Growth (%)
Price-to-BV (x)
EPS (INR)
EPS Growth (%)
Price-to-Earnings (x)
DPS (INR)
Dividend Yield (%)
E: MOFSL estimates
FY17
21.0
9.5
11.5
13.3
FY18
21.1
8.4
12.7
13.5
FY19
21.1
9.0
12.1
12.8
FY20
20.9
9.4
11.5
12.1
FY21
20.0
8.8
11.2
11.7
FY22E
20.0
8.7
11.3
11.7
FY23E
20.0
8.5
11.5
12.2
(%)
FY24E
20.0
8.5
11.5
12.5
11.7
2.6
35.4
3.5
13.5
2.8
32.7
2.1
16.6
3.5
35.1
3.3
14.7
3.3
37.6
5.1
13.2
3.1
38.3
4.6
13.8
3.4
38.5
6.5
15.7
4.1
35.9
6.4
16.9
4.6
34.5
6.3
39.2
48.4
39.6
51.1
39.3
56.1
40.3
56.2
37.8
56.0
37.3
55.1
34.6
55.2
32.0
55.3
120.0
4.7
4.4
FY17
754
10.1
84
5.0
15.0
120.5
4.9
4.8
FY18
842
11.7
108
27.8
18.0
119.6
4.6
4.7
FY19
969
15.0
150
39.0
22.0
114.9
4.3
4.4
FY20
1,092
12.8
152
1.2
6.0
107.3
4.2
4.2
FY21
1,230
12.6
1.2
153
1.0
9.9
33.0
2.2
112.3
3.9
4.0
FY22E
1,380
12.2
1.1
180
17.2
8.5
25.0
1.6
117.6
3.8
3.8
FY23E
1,583
14.7
1.0
233
29.7
6.5
25.0
1.6
121.9
3.6
3.7
FY24E
1,841
16.4
0.8
289
24.0
5.3
25.0
1.6
3 May 2021
9
 Motilal Oswal Financial Services
Shriram City Union Finance
NOTES
3 May 2021
10
 Motilal Oswal Financial Services
Shriram City Union Finance
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
< - 10 % to 15%
Rating may undergo a change
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
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https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
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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.
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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:
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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
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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 services
license and an exempt financial adviser in Singapore.As per the approved agreement under Paragraph 9 of Third Schedule of Securities and Futures Act (CAP 289) and Paragraph 11 of First
Schedule of Financial Advisors Act (CAP 110) provided to MOCMSPL by Monetary Authority of Singapore. Persons in Singapore should contact MOCMSPL in respect of any matter arising
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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
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
3 May 2021
11
 Motilal Oswal Financial Services
Shriram City Union Finance
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.
Terms & Conditions:
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 of MOFSL. The report is
based on the facts, figures and information that are considered true, correct, reliable and accurate. The intent of this report is not recommendatory in nature. The information is obtained from
publicly available media or other sources believed to be reliable. Such information has not been independently verified and no guaranty, representation of warranty, express or implied, is made
as to its accuracy, completeness or correctness. All such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not
constitute an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial 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.
Disclaimer:
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 distributed, in part or
in whole, to any other person or to the media or reproduced in any form, without prior written consent. This report and information herein is solely for informational purpose and may not be
used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments. Nothing 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 objectives, financial positions and needs of specific recipient. This
may not be taken in substitution for the exercise of independent judgment by any recipient. Each recipient of this document should make such investigations as it deems necessary to arrive at
an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult its own advisors to
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options, another derivative products as well as non-investment grade securities - involve substantial risk and are not suitable for all investors. No representation or warranty, express or implied,
is made as to the accuracy, completeness or fairness of 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, directly or indirectly, to any other person or
published, copied, in whole or in part, for any purpose. This report is not directed or intended for distribution to, or use by, any person or 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.
-
3 May 2021
12