March 2018 Results Preview | Sector: Financials - NBFCs
Financials - NBFCs
Company name
Bajaj Finance
Capital First
Chola. Inv & Fin.
Dewan Housing
GRUH Finance
HDFC
Indiabulls Housing
L&T Finance
LIC Housing Fin
M & M Financial
MAS Financial
Muthoot Finance
PNB Housing
Repco Home Fin
Shriram City Union
Shriram Transport Fin.
Vehicle financiers lead the pack
Vehicle financiers could surprise on the upside
Core housing growth has stabilized post RERA implementation, and tier II and III
locations are the key growth drivers. For housing finance corporations (HFCs), we
expect the share of non-retail loans in the overall portfolio to inch higher.
Growth rates will remain healthy for segments like consumer durables, two-wheelers
and vehicle finance. M&HCV demand has been strong in the quarter – GoI’s infra push
being the key driving factor.
Farm loan waivers and normal monsoon have lifted sentiment in the rural economy.
The focus on collections has also helped companies ensure strong recoveries. Vehicle
financiers are expected to report healthy asset quality and growth.
We expect a gradual improvement for microfinance institutions (the most impacted
segment post demonetization) in terms of both growth and asset quality. Our
interactions with gold financiers suggest that growth is slowly coming back.
Elevated G-Sec yields could play a spoilsport over the medium term from a spreads
perspective. Yields have hardened 100bp+ from their lows six months ago. If they
sustain at these levels, HFCs would be most impacted. Vehicle financiers have pricing
power to maintain margins.
BAF, CAFL, MASFIN, CIFC and PNBHF are likely to post earnings growth of 25%+ YoY,
which is commendable, in our view. Our top picks in this space are HDFC, SHTF, BAF
and CIFC.
HFCs – G-Sec yields key monitorable:
HFCs under our coverage are likely to post
AUM growth in line with past trends. Repco may witness another muted quarter, as
state-specific issues in Tamil Nadu are yet to be resolved. We expect the shift
toward LAP for LICHF and toward corporate loans (opportunistic in LRD segment) for
HDFC to continue. Core retail housing yields are expected to remain under pressure
due to intense competition. The benefit of cost of funds is likely to recede, given
100bp+ increase in G-Sec yields over the last six months. G-Sec yield is a key
monitorable.
AFCs – growth across segments to continue:
We expect sturdy performance across
asset financiers. Bajaj Finance is likely to report strong AUM and PAT growth. We
expect growth for vehicle finance players like SHTF and MMFS to pick up
sequentially, helped by a better rural economy and clarity emerging post GST
implementation. Auto OEMs, especially CV players, have delivered decent volume
growth in the quarter. Within the 2W segment, we expect market share gains by
smaller players like CAFL and LTFH to continue, while SCUF is expected to lose some
market share.
Gold financiers – recovery taking root:
Over the past year, AUM of most gold
financiers has been stable. Our interactions with companies suggest that they have
witnessed some green shoots of recovery in the past quarter.
MFIs – disbursements bouncing back:
With stabilization in most states, we expect
credit costs to start declining this quarter onward.
Research Analyst: Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com); +91 22 3982 5415
| Piran Engineer
(Piran.Engineer@MotilalOswal.com); +91 22 3980 4393
Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com); +91 22 3982 5540
| Shubhranshu Mishra
(Shubhranshu.Mishra@MotilalOswal.com); +91 22 3982 5558
Investors
March 2018
are advised to refer through important disclosures made at the last page of the Research Report.
1
Motilal Oswal research is available on
www.motilaloswal.com/Institutional-Equities,
Bloomberg, Thomson Reuters, Factset and S&P Capital.

March 2018 Results Preview | Sector: Financials
Exhibit 1: Expected quarterly performance summary (INR m)
Sector
CMP
RECO
(INR)
1,832
643
1,517
534
595
1,830
1,293
162
552
473
607
417
1,273
573
2,222
1,477
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
Mar-18
22,995
5,582
8,307
6,508
2,159
32,472
15,451
12,854
9,657
13,195
811
11,016
4,375
1,146
8,711
17,543
172,782
NBFC
Bajaj Finance
Capital First
Chola. Inv & Fin.
Dewan Housing
GRUH Finance
HDFC
Indiabulls Housing
L&T Fin.Holdings
LIC Housing Fin
M & M Financial
MAS Financial
Muthoot Finance
PNB Housing
Repco Home Fin
Shriram City Union
Shriram Transport Fin.
NBFC Banking Aggregate
Sales
Var %
YoY
36.8
49.0
26.0
21.4
16.4
13.8
29.6
28.0
-7.1
18.7
67.0
-4.2
31.5
11.5
22.1
24.5
20.0
Var %
QoQ
-3.0
6.0
5.8
4.0
21.8
10.9
10.7
1.2
7.6
23.2
10.3
4.5
6.5
7.0
-4.9
2.6
5.9
EBDITA
Var %
Mar-18
YoY
13,112
3,420
5,055
5,678
1,879
30,450
13,919
10,094
8,345
8,691
579
8,026
4,162
1,027
5,014
13,744
133,194
33.9
45.8
29.5
23.8
16.5
8.7
43.5
30.4
-6.8
19.8
77.6
-3.6
35.0
13.9
16.0
20.3
18.6
Var %
QoQ
-7.9
12.9
7.7
1.1
23.4
11.6
16.1
7.3
3.7
32.6
13.5
3.4
6.8
9.8
-8.0
1.9
7.0
Net Profit
Var %
Var %
Mar-18
YoY
QoQ
6,420
1,005
2,749
3,075
1,276
23,378
10,475
4,002
5,159
4,490
294
4,882
2,330
564
1,418
3,297
74,815
42.9
-16.3
39.8
15.3
25.2
10.3
23.9
0.5
15.6
55.4
14.4
17.4
24.6
12.4
26.7
4.2
-2.5
5.1
91.8
62.1
97.4
16.1
51.7
5.3
52.9
7.1
11.5
16.4
1080.3
-37.1
120.3
-33.5
29.8
6.2
Source: MOSL
Exhibit 2: Relative performance—3 months (%)
115
110
105
100
95
Sensex Index
MOSL Financials Index
Exhibit 3: Relative performance—1 year (%)
146
132
118
104
90
Sensex Index
MOSL Financials Index
Source: Bloomberg, MOSL
Source: Bloomberg, MOSL
Exhibit 4: Comparative valuation
Sector / Companies
NBFC
Aditya Birla Cap
Bajaj Finance
Capital First
Chola. Inv & Fin.
Dewan Housing
GRUH Finance
HDFC
Indiabulls Housing
L&T Fin.Holdings
LIC Housing Fin
M & M Financial
MAS Financial
Muthoot Finance
PNB Housing
Repco Home Fin
Shriram City Union
Shriram Transport Fin.
NBFC Aggregate
CMP
(INR) Reco
Buy
Buy
Buy
Buy
Buy
Neutral
Buy
Buy
Buy
Neutral
Buy
Buy
Neutral
Buy
Buy
Buy
Buy
EPS (INR)
PE (x)
PB (x)
RoE (%)
FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
3.7
5.3
7.6
44.8 61.7 82.8
34.2 44.6 56.8
61.3 71.7 86.2
37.3 48.0 60.5
9.9
11.6 14.4
42.7 49.0 57.3
90.9 104.6 127.4
6.7
9.0
11.3
38.9 44.3 52.6
13.9 19.2 23.0
18.6 24.2 30.0
44.0 44.7 49.8
50.9 67.5 88.1
32.9 39.0 46.0
115.2 138.7 167.3
77.5 104.8 125.9
41.4
40.9
18.8
24.8
14.3
60.2
42.8
14.2
24.2
14.2
34.1
32.6
9.5
25.0
17.4
19.3
19.1
27.9
28.5
29.7
14.4
21.2
11.1
51.2
37.3
12.4
18.1
12.5
24.6
25.1
9.3
18.8
14.7
16.0
14.1
22.8
20.0
22.1
11.3
17.6
8.8
41.3
31.9
10.1
14.3
10.5
20.6
20.2
8.4
14.4
12.4
13.3
11.7
18.6
4.0
6.4
2.4
4.6
1.9
18.0
4.9
4.0
2.6
2.2
3.2
4.6
2.1
3.4
2.7
2.6
2.7
4.0
3.1
5.4
2.1
3.9
1.7
14.8
4.3
3.5
2.3
1.9
3.0
4.0
1.8
3.0
2.3
2.3
2.3
3.5
2.4
4.5
1.8
3.2
1.4
12.2
3.9
3.1
2.1
1.7
2.7
3.5
1.6
2.6
2.0
2.0
2.0
3.0
12.6
19.8
13.7
20.2
14.0
32.7
18.3
29.8
13.3
16.6
10.9
20.2
24.5
14.6
16.7
14.2
14.7
14.4
12.4
19.9
15.6
19.8
15.9
31.7
17.5
30.3
13.7
16.5
12.5
17.0
20.9
17.0
16.9
15.1
17.5
15.2
13.7
22.3
17.2
20.0
17.5
32.4
17.3
32.4
15.3
17.1
13.8
18.5
20.0
19.2
17.0
15.9
18.1
16.4
152
1,832
643
1,517
534
595
1,830
1,293
162
552
473
607
417
1,273
573
2,222
1,477
March 2018
2

March 2018 Results Preview | Sector: Financials
Bajaj Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
BAF IN
573.5
1051 / 16
1989 / 1153
12 / -8 / 43
2019E
101.7
70.5
35.4
61.7
37.8
337
3.6
19.9
12.5
29.7
5.4
0.4
2020E
132.2
94.0
47.5
82.8
34.2
407
3.7
22.3
12.5
22.1
4.5
0.6
CMP: INR1,832
TP: INR2,330 (+27%)
Buy
Financial Snapshot (INR b)
Y/E Mar
NII
PPP
PAT
EPS (INR)
EPS Gr. %
BV/Sh. INR
RoA (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yld.%
2017
54.7
36.4
18.4
32.0
43.6
167
3.3
21.6
14.0
57.2
10.9
0.2
2018E
75.5
50.2
25.7
44.8
39.8
284
3.4
19.8
12.5
40.9
6.4
0.3
We expect AUM growth of 35% YoY, driven by consumer durables
financing, in which the company continues to increase its market
share. Rural business too should register strong growth, albeit off a
low base.
Calculated margins are expected to remain largely stable on YoY
basis at 11.5%.
With investments in upgradation of systems, C/I ratio is expected to
remain largely stable YoY at 43%.
Asset quality is likely to remain stable. We expect provisions of
INR2.6b as against INR2.5b in 3QFY18 and INR2.9b in 4QFY17.
Net profit is likely to grow 43% YoY to INR6.4b.
The stock trades at 5.4x FY19E and 4.5x FY20E BV. Maintain
Buy.
Key issues to watch for
Architecture of Bajaj Housing Finance.
Incremental customer acquisition.
Asset quality trends, especially in LAP and 2W/3W businesses.
Traction in cross-sell franchise.
Quarterly Performance
Y/E March
1Q
Revenue from operations
YoY Growth (%)
Interest expenses
Net Income
YoY Growth (%)
Other income
Total Income
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions and Cont.
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Loan Growth (%)
Borrowings Growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
22,864
38.9
8,833
14,031
44.8
147
14,178
5,865
8,312
58.1
1,797
6,515
2,275
4,240
53.8
39.5
40.5
41.4
34.9
FY17
2Q
23,355
39.0
9,562
13,793
40.0
56
13,849
5,932
7,917
40.2
1,654
6,263
2,185
4,078
45.9
37.8
43.4
42.8
34.9
3Q
26,930
30.6
9,802
17,128
30.5
109
17,237
6,939
10,297
33.5
1,797
8,500
2,943
5,557
36.0
32.6
30.2
40.3
34.6
4Q
26,650
39.1
9,837
16,813
51.4
79
16,892
7,099
9,794
51.7
2,897
6,897
2,406
4,492
42.6
36.1
33.0
42.0
34.9
1Q
31,123
36.1
10,780
20,344
45.0
140
20,484
8,413
12,071
45.2
2,817
9,254
3,234
6,020
42.0
38.9
33.4
41.1
34.9
FY18E
2Q
30,862
32.1
11,438
19,425
40.8
161
19,586
8,752
10,833
36.8
2,278
8,555
2,986
5,569
36.6
37.8
22.6
44.7
34.9
FY17
3Q
35,406
31.5
11,709
23,698
38.4
27
23,724
9,494
14,230
38.2
2,468
11,762
4,094
7,668
38.0
35.4
30.0
40.0
34.8
4QE
34,818
30.6
11,823
22,995
36.8
61
23,056
9,944
13,112
33.9
3,241
9,872
3,452
6,420
42.9
36.0
28.7
43.1
35.0
92,723
34.4
38,034
54,690
37.6
260
54,949
25,642
29,047
40.0
8,182
20,865
9,810
18,366
43.6
32.9
33.0
46.9
35.1
(INR m)
FY18E
121,282
30.8
45,749
75,533
38.1
389
75,922
36,603
38,930
34.0
10,803
28,126
13,766
25,678
39.8
36.0
28.7
48.5
35.1
March 2018
3

March 2018 Results Preview | Sector: Financials
Capital First
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
CAFL IN
97.4
63 / 1
902 / 610
-2 / -18 / -28
CMP: INR643
TP: INR960 (+49%)
Buy
Financial Snapshot (INR m)
Y/E Mar
2017 2018E 2019E 2020E
NII
12.3
18.7
24.2
30.4
PPP
8.1
11.6
15.5
19.8
PAT
2.4
3.3
4.3
5.5
EPS (INR)
24.6
34.2
44.6
56.8
EPS Gr. %
34.2
38.9
30.2
27.5
BV/Sh.INR
234.4 264.9 305.2 357.3
RoA on AUM.%
1.6
1.7
1.8
1.8
RoE (%)
12.0
13.7
15.6
17.2
Payout.%
10.6
9.0
8.0
7.0
Valuations
P/E (x)
26.1
18.8
14.4
11.3
P/BV (x)
2.7
2.4
2.1
1.8
Div. Yld.%
0.4
0.5
0.6
0.6
The company is likely to maintain its strong growth trajectory. AUM
is likely to grow 5% QoQ and 31% YoY, driven by low base of post-
demonetization 4QFY17, and market share gains in the 2W
segment.
With margin expansion of 100bp YoY, NII is likely to grow 49% YoY
to INR5.6b.
Cost-to-income ratio is expected to remain largely stable annually at
51%.
Asset quality is likely to remain stable. We factor in provisions of
INR1.9b as against INR1.7b in 3QFY18 and INR1.3b in 4QFY17.
Net profit is likely to grow 40% YoY to INR1b.
The stock trades at 2.1x FY19E and 1.8x FY20E BV. Maintain
Buy.
Key issues to watch for
Management commentary on growth trends/demand for loans.
Trend in write-offs and overall credit costs.
Guidance on C/I ratio.
Movement in borrowing costs and margins.
Quarterly Performance
Y/E March
Interest Income
Fee Income
1Q
5,539
679
FY17
2Q
3Q
6,112
6,415
751
944
4Q
6,549
1,019
1Q
7,213
991
FY18E
2Q
3Q
7,928
8,830
983
1,129
8,911
29.8
3,268
5,643
44.6
2,889
2,754
50.0
1,576
1,178
393
785
36.3
28.1
23.4
51.2
33.4
9,959
35.3
3,566
6,393
49.5
3,363
3,030
39.4
1,691
1,339
467
872
42.1
31.8
36.7
52.6
34.9
4QE
9,313
1,369
10,682
41.1
3,731
6,951
45.8
3,531
3,420
45.8
1,903
1,517
512
1,005
39.8
30.7
35.6
50.8
33.7
(INR Million)
FY17
23,888
4,121
28,009
48.8
11,606
16,403
66.5
8,298
8,104
68.1
4,530
3,575
1,174
2,389
43.8
20.4
18.0
50.6
35.1
FY18E
32,301
5,456
37,757
34.8
13,630
24,127
47.1
12,521
11,606
43.2
6,578
5,029
1,695
3,334
39.5
33.0
35.6
51.9
35.1
Operating Income
6,218
6,863
7,359
7,568
8,204
YoY Growth (%)
56.1
57.6
48.1
35.6
31.9
Interest expenses
2,760
2,961
3,082
2,803
3,065
Net Income
3,458
3,902
4,277
4,766
5,140
YoY Growth (%)
73.1
74.4
63.0
55.8
48.7
Operating Expenses
1,710
2,066
2,103
2,420
2,738
Operating Profit
1,748
1,837
2,174
2,346
2,402
YoY Growth (%)
72.4
67.7
67.6
58.5
37.4
Provisions and Cont.
995
1,032
1,240
1,264
1,408
Profit before Tax
753
805
934
1,082
994
Tax Provisions
262
229
320
363
323
Net Profit
492
576
614
719
672
YoY Growth (%)
48.5
40.3
37.8
51.4
36.6
AUM Growth (%)
36.1
31.8
25.5
23.6
24.4
Borrowings Growth (%)
46.8
42.0
25.0
18.0
25.5
Cost to Income Ratio (%)
49.4
52.9
49.2
50.8
53.3
Tax Rate (%)
34.7
28.5
34.3
33.6
32.4
E: MOSL Estimates; Quarterly and annual numbers may not match due to reporting styles
March 2018
4

March 2018 Results Preview | Sector: Financials
Cholamandalam Inv & Fin
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
CIFC IN
156.3
156.3
237 / 4
1530 / 964
CMP: INR1,517
TP: INR1,750 (+15%)
Buy
Financial Snapshot (INR b)
Y/E March
NII
PPP
Adj. PAT
EPS (INR)
EPS Gr. (%)
BV (INR)
BVPS Gr. %
RoAA (%)
RoE (%)
Valuations
P/E (x)
P/BV (x)
Div. Yld. %
33.0
5.5
0.3
24.8
4.6
0.4
21.2
3.9
0.5
17.6
3.2
0.5
2017
23.5
13.9
6.9
46.0
26.3
276.0
18.0
2.6
18.0
2018E
30.0
18.2
9.6
61.3
33.3
330.0
20.0
3.0
20.2
2019E
34.9
21.7
11.2
71.7
17.0
393.0
19.0
3.0
19.8
2020E
40.9
26.4
13.5
86.2
20.2
470.0
19.0
3.1
20.0
With strong growth in the VF segment, coupled with gradual
improvement in LAP, we expect AUM growth to pick up to 22% in
4QFY18 compared to 20% in the prior quarter.
Calculated spreads are expected to be stable sequentially, but up
30bp on a YoY basis, largely due to lower cost of funds.
As a result, NII is expected to grow 26% YoY to INR8.3b.
Calculated cost-to-income ratio should decline 160bp to 39.7%. We
expect C/I ratio to remain at 40-41% for the next few quarters.
We believe GNPLs have peaked out and should decline going
forward, as the company has started invoking SARFAESI. We expect
provisions of INR0.9b (at similar level in 3QFY18 and at INR0.5b in
4QFY17).
Net profit is likely to grow 25% YoY to INR2.75b.
The stock trades at 3.9x FY19E and 3.2x FY20E BV. Maintain
Buy.
Key issues to watch for
Management expectation of growth in home equity.
Asset quality trend, especially in home equity.
Trend in opex, given management’s intent to reduce expense
ratio to 2.5% by FY20.
Quarterly Performance
Y/E March
FY17
FY18E
1Q
2Q
3Q
4Q
1Q
2Q
3Q
Income from Operations
11,017 11,558 11,698 12,069 12,273 12,884 13,758
Interest Expenses
5,481
5,694
5,658
5,476
5,410
5,568
5,903
Net Interest Income
5,536
5,864
6,040
6,594
6,863
7,317
7,855
YoY Growth (%)
13.8
20.6
20.1
22.5
24.0
24.8
30.1
Other Op. and Other Income
68
69
60
65
76
76
76
Net Operating Income
5,604
5,933
6,100
6,659
6,939
7,392
7,931
YoY Growth (%)
14.3
21.0
20.5
22.6
23.8
24.6
30.0
Operating Expenses
2,264
2,527
2,588
2,754
2,777
3,089
3,237
Operating Profit
3,341
3,405
3,512
3,905
4,162
4,304
4,694
YoY Growth (%)
20.4
22.7
17.9
19.1
24.6
26.4
33.7
Provisions & Loan Losses
804
772
1,003
529
981
832
902
Profit before Tax
2,537
2,634
2,509
3,376
3,181
3,472
3,792
Tax Provisions
880
924
884
1,181
1,116
1,199
1,300
Net Profit
1,657
1,709
1,625
2,196
2,066
2,273
2,492
YoY Growth (%)
50.3
41.9
11.5
14.3
24.6
32.9
53.3
AUM Growth (%)
18.3
18.7
16.7
14.6
13.5
14.4
19.5
Disbursement Growth (%)
30.1
21.0
2.7
5.5
6.4
23.6
54.6
NIM on AUM (%)
7.3
7.5
7.5
7.9
7.9
8.2
8.3
Cost to Income Ratio (%)
40.4
42.6
42.4
41.4
40.0
41.8
40.8
Tax Rate (%)
34.7
35.1
35.2
35.0
35.1
34.5
34.3
E: MOSL Estimates; *Quaterly nos and full year nos will not tally due to different way of reporting financial nos
FY2017
4QE
14,560
6,253
8,307
26.0
81
8,388
26.0
3,333
5,055
29.5
875
4,180
1,431
2,749
25.2
21.6
40.8
8.2
39.7
34.2
45,790
22,308
23,482
13.4
529
24,011
12.0
10,133
13,878
6.9
3,106
10,771
3,868
6,903
21.4
15.2
13.5
7.6
41.7
35.0
(INR M)
FY2018E
53,097
23,133
29,964
27.6
685
30,650
27.6
12,436
18,214
31.2
3,589
14,625
5,046
9,580
38.8
21.6
31.5
7.9
40.6
34.5
March 2018
5

March 2018 Results Preview | Sector: Financials
Dewan Housing Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
DEWH IN
167 / 3
678 / 367
1 / -9 / 31
167 / 3
2019E
26.5
28.3
15.0
48.0
28.7
321
1.3
15.9
17.4
11.1
1.7
1.7
1.3
2020E
33.1
35.3
18.9
60.5
26.0
371
1.3
17.5
17.4
8.8
1.4
1.4
1.7
CMP: INR534
TP: INR720 (+35%)
Buy
Financial Snapshot (INR m)
Y/E March
NII
PPP
Adj. PAT
EPS (INR)
EPS Gr. %
BV (INR)
RoAA (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
P/ABV (x)
Div. Yld. %
2017
15.1
16.2
9.3
29.6
18.5
252
1.2
14.4
15.7
18.0
2.1
2.1
0.7
2018E
19.8
21.3
11.7
37.3
25.9
282
1.2
14.0
17.4
14.3
1.9
1.9
1.0
Business growth has been good, despite the implementation of
GST and RERA. We expect 34% YoY growth in disbursements off a
low base.
As a result, AUM is likely to grow 30% YoY.
We expect stable margins. As a result, we expect 26% YoY growth
in NII in the quarter.
Calculated cost-to-income ratio will decline 60bp YoY to 26.6%.
We factor in provisions of INR1.1b for 4QFY18 v/s INR1b in 3QFY18.
Net profit is likely to grow 24% YoY to INR3.1b.
The stock trades at 1.7x FY19E and 1.4x FY20E BV. Maintain
Buy.
Key issues to watch for
Growth in non-retail portfolio v/s retail portfolio.
Margin guidance.
Asset quality trends in non-retail and LAP segments.
Guidance on cost structure.
Quarterly performance
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Fees and other income
Net Income
YoY Growth (%)
Operating Expenses
YoY Growth (%)
Operating Profits
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Profit after tax
YoY Growth (%)
Loan growth (%)
Borrowings growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
19,319
14,754
4,565
14.5
275
4,840
15.5
1,361
8.4
3,479
18.6
450
3,029
1,015
2,014
16.2
18.3
20.4
28.1
33.5
FY17
2Q
3Q
21,227 23,151
16,307 18,001
4,920
5,150
21.0
20.8
451
514
5,371
5,664
18.3
21.6
1,398
1,497
6.1
9.1
3,972
4,167
23.2
26.9
450
450
3,522
3,717
1,196
1,269
2,326
2,448
29.0
31.7
16.0
16.9
38.5
28.0
26.0
26.4
34.0
34.2
4Q
22,835
17,475
5,360
22.6
943
6,303
29.1
1,717
10.8
4,586
37.7
830
3,756
1,273
2,483
30.9
16.7
33.1
27.2
33.9
1Q
23,529
17,869
5,660
24.0
549
6,209
28.3
1,570
15.4
4,640
33.4
830
3,810
1,205
2,605
29.3
19.8
34.4
25.3
31.6
FY18E
2Q
3Q
25,034 25,204
19,034 18,944
6,000
6,260
22.0
21.6
1,108
1,138
7,108
7,398
32.4
30.6
1,698
1,781
21.4
19.0
5,411
5,617
36.2
34.8
1,070
1,000
4,341
4,617
1,408
1,558
2,933
3,060
26.1
25.0
24.6
21.7
10.8
12.7
23.9
24.1
32.4
33.7
FY17
4QE
25,842
19,334
6,508
21.4
1,226
7,733
22.7
2,056
19.8
5,678
23.8
1,024
4,654
1,579
3,075
23.9
25.6
16.3
26.6
33.9
86,531
66,536
19,995
19.8
2,182
22,177
21.4
5,973
8.7
16,204
26.9
2,180
14,024
4,754
9,270
27.1
18.5
33.1
26.9
33.9
(INR M)
FY18E
99,609
75,181
24,428
22.2
4,021
28,449
28.3
7,104
18.9
21,345
31.7
3,924
17,421
5,749
11,672
25.9
22.6
23.9
25.0
33.0
March 2018
6

March 2018 Results Preview | Sector: Financials
Gruh Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
GRHF IN
364.6
217 / 3
714 / 368
13 / 12 / 38
2019E
7.8
7.2
4.2
11.6
17.7
40.1
40.1
2.4
31.7
34.0
51.1
14.8
0.7
2020E
9.4
8.8
5.2
14.4
23.8
48.8
48.8
2.4
32.4
34.0
41.3
12.2
0.8
CMP: INR594
TP: INR550 (-7%)
Neutral
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
EPS Gr. %
BV/Sh.INR
ABV/Sh.INR
RoA (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yld. %
73.0
21.9
0.5
60.2
17.9
0.6
2017
5.2
4.7
3.0
8.1
21.5
27.2
27.2
2.4
32.5
34.0
2018E
6.7
6.2
3.6
9.9
21.3
33.1
33.1
2.4
32.7
34.0
We expect loan growth to be largely in line with trend at 5% QoQ
and 18% YoY.
Calculated margins are likely to be largely stable YoY at 5.7%.
As a result, NII is likely to grow 16% YoY to INR2.2b.
Operating expense growth is expected to be 16%, resulting in 17%
YoY growth in PPoP.
We expect collections to be high. We expect provisions of INR26m
for the quarter.
Net profit is likely to grow 18% YoY to INR1.3b.
The stock trades at 14.8x FY19E and 12.2x FY20E BV. Maintain
Neutral.
Key issues to watch for
Disbursement growth v/s loan growth.
Outlook on margins.
Management’s plan for geographic expansion.
Guidance on opex.
Quarterly performance
Y/E MARCH
Operating Income
Total income
Y-o-Y Growth (%)
Interest expenses
Net Income
Operating Expenses
Operating Profit
Y-o-Y Growth (%)
Provisions and Cont.
Profit before Tax
Tax Provisions
Net Profit
Y-o-Y Growth (%)
Int Exp/ Int Earned (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
3,463
3,463
16.7
2,241
1,222
201
1,021
17.5
125
896
294
601
19.6
64.7
16.5
32.8
FY17
2Q
3,674
3,674
17.8
2,351
1,323
273
1,050
20.1
91
958
339
619
19.9
64.0
20.7
35.4
3Q
3,810
3,810
17.8
2,297
1,513
219
1,294
29.8
327
967
326
640
19.2
60.3
14.5
33.8
4Q
4,161
4,161
12.3
2,307
1,854
241
1,613
23.3
14
1,600
495
1,104
25.8
55.4
13.0
31.0
1Q
3,981
3,981
15.0
2,365
1,617
254
1,362
33.4
279
1,083
361
722
20.0
59.4
15.7
33.3
FY18E
2Q
4,141
4,141
12.7
2,415
1,726
303
1,422
35.5
228
1,194
417
777
25.5
58.3
17.6
34.9
3Q
4,285
4,285
12.5
2,512
1,773
251
1,522
17.7
242
1,281
459
821
28.3
58.6
14.1
35.9
4QE
4,773
4,773
14.7
2,614
2,159
280
1,879
16.5
26
1,853
577
1,276
15.6
54.8
13.0
31.1
(INR Million)
FY17
FY18E
14,871
14,874
16.6
9,196
5,678
935
4,742
23.6
322
4,420
1,454
2,967
21.8
61.8
16.5
32.9
17,176
17,179
15.5
9,905
7,274
1,089
6,186
30.4
775
5,411
1,813
3,598
21.3
57.7
15.0
33.5
March 2018
7

March 2018 Results Preview | Sector: Financials
HDFC
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
HDFC IN
1663.4
3044 / 47
1982 / 1461
3 / -2 / 8
CMP: INR1,830
TP: INR2,225 (22%)
Buy
Financial Snapshot (INR b)
Y/E Mar
NII
PAT
Adj. EPS.INR
EPS Gr. (%)
BV/Sh. INR
ABV/Sh. INR
RoAA (%)
Core RoE.%
Payout (%)
Valuation
AP/E (x)
P/BV (x)
AP/ABV (x)
Div. Yld (%)
33.2
7.2
5.9
1.0
25.7
4.9
4.2
0.7
18.7
4.3
2.9
1.0
12.7
3.9
2.1
1.0
2017 2018E 2019E 2020E
99.5
74.4
35.7
9.6
253.0
201.2
2.0
18.9
37.1
113.7
116.6
39.9
12.0
372.4
244.9
1.9
18.3
34.5
131.8
96.3
47.7
19.5
429.1
304.3
1.9
17.5
42.9
153.4
112.5
56.3
18.0
470.4
345.5
1.9
17.3
38.9
We estimate AUM growth of 19% YoY, in line with the trend in
the prior quarters. We expect the pick-up in corporate loan
growth to sustain.
NII is expected to grow 14% YoY, with calculated margins
declining by 25bp YoY.
Operating expenses will grow 10% YoY to INR2.1b.
Asset quality has remained healthy over past several quarters,
and the trend is likely to continue. Asset quality in the corporate
loan book would be a key monitorable.
We estimate provisions at INR1b v/s INR1.5b in 4QFY17.
We expect reported PAT of INR23.4b in the quarter, manifesting a
growth of 14% YoY.
The stock trades at 2.9x FY19E AP/ABV and 2.1x FY20E AP/ABV
(price adjusted for value of other businesses and book value
adjusted for investments made in those businesses).
Buy.
Key issues to watch for
Loan growth and uptick in corporate loans.
Loan growth in affordable housing segment.
Movement in spreads and margins (on individual loans), and
asset quality trends.
Quarterly Performance
Y/E March
Net Interest Income
YoY Change (%)
Gross fee income
Core Income
YoY Change (%)
Operating Expenses
% of core income
Comission expenses
% of core income
Core Operating profits
YoY Change (%)
Provisions
Core PBT
YoY Change (%)
Profit on Sale of Inv.
Dividend income
One off expense/Prov
Other Income
PBT
YoY Change (%)
Provision for Tax
PAT
YoY Change (%)
E: MOSL Estimates
1Q
22,291
9.3
1,888
24,178
9.2
2,274
9.4
1,369
5.7
20,535
7.3
650
19,885
6.7
9,216
536
-2,750
111
26,997
38.3
8,290
18,707
37.5
FY17
2Q
22,972
14.5
1,966
24,938
14.3
2,048
8.2
1,344
5.4
21,546
14.1
950
20,596
12.1
281
4,580
118
25,575
10.1
7,310
18,265
13.9
3Q
25,755
18.0
1,948
27,703
17.2
2,142
7.7
1,011
3.6
24,550
19.5
1,170
23,380
17.7
34
1,783
114
25,312
15.6
8,300
17,012
11.9
4Q
28,524
15.5
2,684
31,208
13.1
1,904
6.1
1,300
4.2
28,005
13.8
1,480
26,525
12.1
486
2,246
125
29,382
-19.3
8,940
20,442
-21.6
1Q
25,852
16.0
2,081
27,933
15.5
2,536
9.1
1,704
6.1
23,693
15.4
850
22,843
14.9
21
615
109
23,587
-12.6
8,030
15,557
-16.8
FY18E
2Q
3Q
26,108 29,287
13.7
13.7
1,599
2,091
27,707 31,378
11.1
13.3
2,248
2,395
8.1
7.6
1,577
1,691
5.7
5.4
23,882 27,292
10.8
11.2
950
950
22,932 26,342
11.3
12.7
654 52,665
5,381
1,528
-15,750
104
117
29,071 64,902
13.7
156.4
8,060
8,200
21,011 56,702
15.0
233.3
FY17
4QE
32,472
13.8
2,136
34,608
10.9
2,096
6.1
2,062
6.0
30,450
8.7
995
29,455
11.0
1,159
2,885
138
33,637
14.5
10,259
23,378
14.4
99,542
14.5
8,486
108,029
13.6
8,368
7.7
5,024
4.7
94,637
13.8
4,250
90,387
12.3
10,017
9,144
-2,750
468
107,266
1.6
32,840
74,426
-1.3
(INR M)
FY18E
113,719
14.2
7,906
121,625
12.6
9,275
7.6
7,033
5.8
105,317
11.3
3,745
101,572
12.4
54,500
10,408
-15,750
468
151,198
41.0
34,549
116,649
56.7
March 2018
8

March 2018 Results Preview | Sector: Financials
Indiabulls Housing
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
IHFL IN
421.3
545 / 8
1439 / 922
5 / -1 / 18
CMP: INR1,292 TP: INR1,630 (+26%)
Buy
AUM growth is expected to remain robust at 9% QoQ and 28% YoY.
Total income (including investment income) should grow 24% YoY
to INR18.5b.
Expenses (including provisions) are likely to decrease 11% YoY to
INR4.6b (off a high base of post-demonetization 4QFY17).
Asset quality is expected to remain stable.
PAT is likely to grow 25% YoY to INR10.5b during the quarter.
The stock trades at 3.5x FY19E and 3.1x FY20E BV. Maintain
Buy.
Financial Snapshot (INR b)
Y/E Mar
2017 2018E 2019E 2020E
Net Fin inc
35.3 49.7 60.8 75.8
PPP
45.5 60.6 69.0 84.8
EPS INR
68.6 90.9 104.6 127.4
EPS Gr. %
23.2 32.6 15.0 21.8
BV/Sh. INR
286.0 324.0 367.0 420.0
RoA on AUM (%)
3.4
3.4
3.0
2.8
RoE (%)
25.5 29.8 30.3 32.4
Payout (%)
39.3 50.0 50.0 50.0
Valuations
P/E (x)
18.8 14.2 12.4 10.1
P/BV (x)
4.5
4.0
3.5
3.1
P/ABV (x)
Div. Yld %
4.5
2.1
4.0
3.5
3.5
4.0
3.1
4.9
Key issues to watch for
AUM growth trend and guidance.
Movement in incremental spreads and margins, especially given
the sharp home loan rate cuts.
Asset quality trends in the corporate and LAP segments.
Quarterly Performance
Y/E March
Income from operations
Other Income
Total income
Y-o-Y Growth (%)
Interest expenses
Net Income
Y-o-Y Growth (%)
Operating Expenses
Profit before tax
Y-o-Y Growth (%)
Tax Provisions
Net Profit
Minority Int
Net Profit after MI
Y-o-Y Growth (%)
AUM Growth (%)
C/I Ratio incl provisions (%)
Tax Rate (%)
E: MOSL Estimates
1Q
23,720
2,255
25,975
28.3
14,109
11,866
33.9
3,116
8,750
26.4
2,401
6,349
-49
6,301
23.2
31.5
26.3
27.4
(INR M)
FY17
2Q
25,098
3,651
28,749
28.0
16,279
12,470
24.6
3,258
9,212
24.3
2,352
6,861
-18
6,843
23.2
29.3
26.1
25.5
3Q
25,859
4,186
30,045
30.2
16,329
13,716
26.8
3,658
10,058
24.9
2,555
7,502
13
7,515
24.7
30.8
26.7
25.4
4Q
29,314
2,935
32,249
21.8
17,391
14,858
15.6
5,160
9,698
9.0
1,325
8,373
32
8,405
24.4
32.9
34.7
13.7
1Q
29,560
2,690
32,250
24.2
17,722
14,528
22.4
3,928
10,600
21.1
2,764
7,836
46
7,882
25.1
33.0
27.0
26.1
FY18E
2Q
30,670
2,755
33,425
16.3
18,355
15,070
20.8
3,935
11,135
20.9
2,615
8,520
91
8,611
25.8
33.1
26.1
23.5
3Q
33,492
7,565
41,057
36.7
19,531
21,525
56.9
5,932
15,594
55.0
3,939
11,655
23
11,677
55.4
31.8
27.6
25.3
FY17
FY18E
4QE
35,871 103,990 129,593
3,024 13,027 16,034
38,895 117,017 145,626
20.6
26.8
24.4
20,419 64,108 76,028
18,475 52,910 69,599
24.3
24.4
31.5
4,556 15,192 18,351
13,919 37,718 51,248
43.5
20.5
35.9
3,494
8,633 12,812
10,425 29,085 38,436
50
-22
210
10,475 29,064 38,226
24.6
24.0
31.5
28.1
32.9
28.1
24.7
25.1
22.9
25.0
March 2018
9

March 2018 Results Preview | Sector: Financials
L&T Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
LTFH IN
1817.2
295 / 5
214 / 119
2 / -23 / 20
CMP: INR162
TP: INR240 (+48%)
Buy
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
BV/Sh. INR
RoAA (%)
RoE (%)
Payout (%)
Valuation
P/E (x)
P/BV (x)
Div. Yld (%)
2017
31.4
26.7
9.2
5.2
44.3
1.3
12.4
19.8
30.9
3.7
0.6
2018E
37.2
36.1
13.3
6.7
61.7
1.7
13.3
15.2
24.1
2.6
0.5
2019E 2020E
43.6
43.5
17.8
9.0
69.3
1.9
13.7
14.9
18.1
2.3
0.7
50.0
51.4
22.5
11.3
79.0
2.1
15.3
14.7
14.3
2.1
0.9
The company is likely to report strong numbers in the rural and
housing finance segment. Performance in the wholesale finance
segment is a key monitorable.
We expect 22% YoY growth in the focus segments, driven by
33%/47%/11% YoY growth in the rural/housing/wholesale
segments. AUM (including de-focused book) is likely to cross
INR790b.
Total income is likely to grow 33% YoY, driven by loan mix (rural
and housing have higher margins than wholesale finance) and
increased contribution from non-fund-based businesses.
Asset quality is likely to remain stable. We model provisions of
INR5.4b, as against INR4.9b in 3QFY18 and INR6.9b in 4QFY17.
The stock trades at 2.3x FY19E and 2.1x FY20E BV. Maintain
Buy.
Key issues to watch for
Commentary on outlook for rural and housing finance segment.
Competition in the wholesale finance segment, especially
renewables.
Asset quality outlook in the builder financing segment.
RoE target post capital infusion.
Quarterly performance
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Other income
Total Income
YoY Growth (%)
Operating Expenses
YoY Growth (%)
Operating Profits
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
P/L of Associate Company
Profit after tax
YoY Growth (%)
Loan growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
19,965
11,557
8,408
14.7
342
8,751
13.1
3,222
3.6
5,529
19.4
2,530
2,999
951
26
2,074
8.2
18.2
36.8
31.7
FY17
2Q
20,876
11,532
9,343
17.4
540
9,883
17.7
3,327
-1.9
6,557
31.0
3,202
3,354
888
15
2,481
16.3
18.5
33.7
26.5
3Q
20,940
11,602
9,338
16.0
679
10,018
17.9
3,154
-1.4
6,864
29.7
3,282
3,582
811
(63)
2,709
28.7
10.4
31.5
34.5
4Q
21,626
11,580
10,046
20.9
755
10,801
22.3
3,063
-10.7
7,738
43.2
6,885
853
-2,286
19
3,158
34.3
14.4
28.4
-267.9
1Q
22,587
12,326
10,261
22.0
1,071
11,332
29.5
3,277
1.7
8,055
45.7
4,587
3,468
378
2
3,092
49.1
17.2
28.9
10.9
FY18E
2Q
3Q
23,838
26,302
12,967
13,596
10,871
12,706
16.4
36.1
1,109
709
11,980
13,415
21.2
33.9
3,419
4,006
2.8
27.0
8,561
9,409
30.6
37.1
4,707
4,928
3,855
4,480
230
636
(22)
(4)
3,602
3,841
45.2
41.8
18.8
22.6
28.5
29.9
6.0
14.2
FY17
4QE
27,138
14,284
12,854
28.0
1,553
14,407
33.4
4,313
40.8
10,094
30.4
5,444
4,650
663
15
4,002
26.7
18.7
29.9
14.3
83,406
46,270
37,136
17.3
2,317
39,453
17.9
12,765
-2.8
26,688
31.2
15,899
10,789
364
-3
10,427
87
10.4
32.4
3.4
(INR M)
FY18
99,865
53,173
46,692
25.7
4,441
51,133
29.6
15,014
17.6
36,119
35.3
19,665
16,454
1,907
-9
14,556
39.6
19.6
29.4
11.6
March 2018
10

March 2018 Results Preview | Sector: Financials
LIC Housing Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
LICHF IN
505.0
279 / 4
794 / 478
11 / -20 / -23
2019E
40.5
36.1
22.4
44.3
13.8
286.0
1.4
16.5
19.7
12.5
1.9
1.4
2020E
47.1
42.2
26.6
52.6
18.7
328.0
1.4
17.1
19.7
10.5
1.7
1.6
CMP: INR552
TP: INR610 (+10%)
Neutral
Financial Snapshot (INR b)
Y/E March
NII
PPP
Adj. PAT
Adj. EPS INR
EPS Gr. (%)
BV/Sh. INR
RoAA (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yld %
14.4
2.5
1.1
14.2
2.2
1.2
2017 2018E
36.5
32.4
19.3
38.2
16.3
219.0
1.5
19.1
18.8
36.6
32.7
19.7
38.9
1.8
251.0
1.3
16.6
19.7
We expect loan growth of 13% YoY, driven primarily by the LAP
segment. The share of builder loans is likely to remain ~4% of
overall book. Growth in the retail home loan book would be the
key monitorable.
Calculated margins are likely to remain largely stable at 2.4%,
driven by falling loan yields.
Operating expenses would decrease 4% YoY, with the C/I ratio
increasing 40bp YoY to ~18%.
Asset quality is likely to remain stable. We model provisions of
INR420m as against INR484m in 3QFY18 and INR893m in 4QFY17.
The stock trades at 1.9x FY19E and 1.7x FY20E BV. Maintain
Neutral.
Key issues to watch for
Trend in incremental spreads.
Performance of corporate loan book and loans against property.
Management commentary on increasing competitive intensity
and margin trends.
Quarterly Performance
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Fees and other income
Net Income
YoY Growth (%)
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions and Cont.
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
Loan Growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
33,263
25,018
8,245
25.1
535
8,780
24.2
1,382
7,399
18.7
1,165
6,234
2,156
4,078
6.7
15.4
15.7
34.6
FY17
2Q
3Q
34,283 35,125
25,626 25,972
8,657
9,154
20.8
22.6
616
362
9,273
9,516
18.8
18.7
1,364
1,407
7,909
8,109
17.3
19.2
303
453
7,606
7,656
2,659
2,663
4,948
4,993
20.2
19.2
14.9
15.3
14.7
14.8
35.0
34.8
4Q
36,096
25,699
10,396
26.6
523
10,919
22.7
1,965
8,954
22.3
893
8,061
2,769
5,292
18.1
15.5
18.0
34.4
1Q
36,332
26,962
9,370
13.6
214
9,583
9.1
1,354
8,229
11.2
1,045
7,185
2,484
4,701
15.3
15.4
14.1
34.6
FY18E
2Q
3Q
36,581 37,124
27,705 28,148
8,875
8,976
2.5
-1.9
586
552
9,461
9,528
2.0
0.1
1,402
1,477
8,059
8,050
1.9
-0.7
578
484
7,481
7,566
2,589
2,655
4,891
4,911
-1.1
-1.6
15.5
15.4
14.8
15.5
34.6
35.1
FY17
4QE
38,197
28,540
9,657
-7.1
568
10,225
-6.4
1,880
8,345
-6.8
420
7,925
2,766
5,159
-2.5
12.9
18.4
34.9
138,767
102,315
36,452
23.8
2,036
38,489
21.1
6,118
32,371
19.4
2,813
29,558
10,247
19,311
16.3
15.5
15.9
34.7
(INR M)
FY18E
148,234
111,356
36,878
1.2
1,919
38,797
0.8
6,114
32,684
1.0
2,527
30,156
10,494
19,662
1.8
12.9
15.8
34.8
March 2018
11

March 2018 Results Preview | Sector: Financials
Mahindra Financial Services
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
MMFS IN
614.0
291 / 4
524 / 290
13 / 6 / 37
CMP: INR473
TP: INR575 (+22%)
Buy
Financial Snapshot (INR b)
Y/E Mar
NII
PPP
PAT
2017 2018E 2019E 2020E
33.2
19.3
4.0
41.6
25.8
8.5
13.9
148.6
121.7
1.9
10.9
41.0
34.1
3.2
3.9
1.0
48.6
30.1
11.8
19.2
160.0
133.0
2.2
12.5
41.0
24.6
3.0
3.6
1.4
55.9
34.4
14.1
23.0
173.6
147.5
2.3
13.8
41.0
20.6
2.7
3.2
1.7
EPS (INR)
7.1
BV/Sh.INR
114.6
ABV/Sh.INR
94.8
RoA on AUM (%)
1.0
RoE (%)
6.4
Payout (%)
39.2
Valuations
P/E (x)
66.8
P/BV (x)
4.1
P/ABV (x)
5.0
Div. Yld.%
0.6
There has been good traction in vehicle sales in the quarter,
which should translate into 17% YoY AUM growth in the quarter.
Calculated margins are expected to increase over 30bp, due to
lower cost of funds. As a result, we expect 19% NII growth in the
quarter.
With 16% growth in operating expenses, PPoP growth should be
~20% YoY.
GNPL ratio should decline to ~10% as 4Q is a seasonally strong
quarter.
We factor in INR2b provisions in 4QFY18 v/s INR2b in 3QFY18 and
INR3.6b in 4QFY17.
The stock trades at 3x FY19E and 2.7x FY20E BV. Maintain
Buy.
Key issues to watch for
Management commentary on performance of rural areas.
Commentary on pick-up in the CV cycle.
Asset quality trend in the wake of good monsoons.
Margin and growth trends.
Performance of subsidiaries.
Quarterly Performance
Y/E March
Operating Income
Other Income
Total income
YoY Growth (%)
Interest Expenses
Net Income
YoY Growth (%)
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
AUM growth (%)
Borrowings growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
13,664
93
13,757
0.5
6,910
6,847
-5.4
3,260
3,587
-22.1
2,245
1,341
472
870
-2.2
10.0
11.1
47.6
35.2
FY17
2Q
3Q
14,916
14,904
241
130
15,157
15,035
5.4
6.7
7,086
7,441
8,071
7,593
2.9
2.7
3,567
3,645
4,504
3,949
-10.5
-11.2
3,042
4,190
1,462
-241
514
-85
948
-156
-35.1
-123.3
14.0
12.9
16.4
15.8
44.2
48.0
35.2
35.2
4Q
18,255
173
18,427
9.1
7,137
11,290
10.8
4,037
7,252
6.7
3,614
3,638
1,298
2,341
-36.8
13.9
17.8
35.8
35.7
1Q
15,924
107
16,031
16.5
7,327
8,704
27.1
3,810
4,894
36.5
4,258
636
162
474
-45.5
13.9
17.8
43.8
25.5
FY18E
2Q
3Q
16,608 18,340
221
124
16,829 18,464
11.0
22.8
7,498
7,629
9,331 10,835
15.6
42.7
3,694
4,282
5,636
6,553
25.1
65.9
4,446
1,989
1,190
4,563
410
1,793
780
2,770
-17.7 -1,871.5
13.8
13.3
16.1
8.8
39.6
39.5
34.5
39.3
FY17
4QE
20,832
184
21,016
14.1
7,637
13,379
18.5
4,688
8,691
19.8
2,031
6,659
2,169
4,490
91.8
16.7
14.3
35.0
32.6
61,739
636
62,375
5.6
28,574
33,801
3.5
14,509
19,292
-7.6
13,091
6,202
2,198
4,003
-40.5
0.0
13.9
42.9
35.4
(INR M)
FY18E
71,703
636
72,340
16.0
30,091
42,248
25.0
16,474
25,774
33.6
12,725
13,050
4,534
8,515
112.7
0.0
8.0
39.0
34.7
March 2018
12

March 2018 Results Preview | Sector: Financials
MAS Financial
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
MASFIN IN
54.7
33 / 1
701 / 541
4/-/-
CMP: INR607
TP: INR750 (+24%)
Buy
Financial Snapshot (INR b)
Y/E Mar
2017 2018E 2019E 2020E
NII
1,721.0
2.5
3.2
3.9
PPP
1,333.0
2.0
2.6
3.2
PAT
646.0
1.0
1.3
1.6
EPS (INR)
15.0 18.6 24.2 30.0
BV/Sh (INR)
66.2 132.9 151.0 173.5
RoA on AUM. %
2.1
2.7
2.8
2.8
RoE (%)
30.5 20.2 17.0 18.5
Valuations
P/E (x)
40.4 32.6 25.1 20.2
P/BV (x)
9.2
4.6
4.0
3.5
The company is likely to have a stable quarter. We expect AUM
growth of 26% YoY, driven by 25% disbursement growth. Loan
mix is likely to be largely stable.
Calculated margins are expected to expand ~200bp on a YoY basis
to 8.6%. As a result, NII growth should come in at 67%.
With 45% YoY growth in opex, C/I ratio is likely to decline 400bp
to 28.6%.
Asset quality is likely to remain stable. We expect provisions to be
sequentially stable at INR1.3b.
Net profit is likely to grow 97% YoY to INR294m.
The stock trades at 4x FY19E and 3.5x FY20E BV. Maintain
Buy.
Key issues to watch for
Guidance on growth trends and loan mix.
Asset quality performance.
Management commentary on increasing competitive intensity
and margin trends.
Quarterly Performance
Y/E March
Total Income
Interest expenses
Net Income
Growth Y-o-Y (%)
Operating Expenses
Operating Profits
Growth Y-o-Y (%)
Provisions
Profit before tax
Growth Y-o-Y (%)
Tax Provisions
Net Profit
Growth Y-o-Y (%)
Int. Exp/Int. Income %
Cost to Income Ratio %
Prov to Operating Profits %
Tax Rate %
E: MOSL Estimates
1Q
835
389
445
142
303
70
233
83
149
46.6
32.0
23.2
35.8
FY17
2Q
866
384
482
143
340
53
286
96
190
44.4
29.6
15.7
33.5
3Q
874
385
489
160
329
47
282
97
185
44.0
32.6
14.3
34.4
4Q
840
355
485
159
326
96
230
80
149
42.2
32.8
29.6
35.1
1Q
978
375
603
35.3
160
443
46.2
91
352
51.4
122
230
54.3
38.4
26.5
20.5
34.6
FY18E
2Q
3Q
1,061
1,130
396
395
665
735
38.0
50.4
178
225
488
510
43.6
54.9
103
123
385
388
34.3
37.3
134
134
251
253
31.8
36.9
37.3
34.9
26.7
30.6
21.1
24.1
34.8
34.6
FY17
4QE
1,216
406
811
67.0
232
579
77.6
128
451
96.6
157
294
97.4
33.3
28.6
22.1
34.8
3,415
1,513
1,902
604
1,298
267
1,031
357
674
44.3
31.8
20.6
34.6
(INR M)
FY18E
4,386
1,572
2,814
47.9
794
2,020
55.6
445
1,576
52.9
547
1,029
52.7
35.8
28.2
22.0
34.7
March 2018
13

March 2018 Results Preview | Sector: Financials
Muthoot Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
MUTH IN
399.5
166 / 3
526 / 360
9 / -18 / -2
CMP: INR417
TP: INR475 (+14%)
Neutral
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
BV/Sh.(INR)
RoA on AUM (%)
RoE (%)
Div. Yld. (%)
P/E (x)
P/BV (x)
2017 2018E 2019E 2020E
33.6
22.0
11.8
29.5
163.1
4.6
19.4
1.4
14.1
2.6
41.5
30.1
17.6
44.0
196.5
6.3
24.5
2.1
9.5
2.1
41.7
29.3
17.8
44.7
230.3
5.9
20.9
2.1
9.3
1.8
46.1
32.4
19.9
49.8
268.0
6.0
20.0
2.4
8.4
1.6
AUM is expected to grow 6% YoY to INR289b.
Margins should contract ~130bp YoY to 15.9% due to the high base
in 4QFY17.
We expect total income to decline 3% YoY to INR11.4b.
Asset quality is likely to be stable in 4QFY18, as collections should
be high.
We estimate provisions of INR515m as against INR564m in 3QFY18.
PAT is expected to grow 51% YoY to INR4.9b.
The stock trades at 1.8x FY19E and 1.6x FY20E BV. Maintain
Neutral.
Key issues to watch for
Management commentary on business growth and steps taken to
sustain AUM growth.
Plan of branch expansion.
Movement in yields and margins, with declining cost of funds.
Progress in gold auctions.
Quarterly Performance
Y/E March
Income from operations
Other operating income
Total Operating income
YoY Growth (%)
Other income
Total Income
YoY Growth (%)
Interest Expenses
Net Income
Operating Expenses
Operating Profit
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Net Profit
YoY Growth (%)
E: MOSL Estimates
1Q
12,712
252
12,964
13.7
44
13,008
13.8
5,571
7,437
3,025
4,413
50.1
176
4,237
1,534
2,703
47.6
FY17
2Q
13,497
320
13,817
21.6
45
13,862
21.6
5,937
7,925
3,130
4,795
69.5
171
4,624
1,657
2,967
70.0
3Q
13,225
184
13,409
17.8
56
13,464
18.0
5,970
7,494
3,000
4,495
51.2
39
4,456
1,545
2,911
55.9
4Q
16,962
135
17,096
18.2
36
17,132
18.0
5,460
11,672
3,349
8,323
37.6
2,430
5,893
2,675
3,218
21.3
1Q
13,758
165
13,923
7.4
63
13,986
7.5
5,326
8,660
3,075
5,585
26.6
66
5,518
2,007
3,511
29.9
FY18E
2Q
3Q
16,385 15,227
264
310
16,649 15,537
20.5
15.9
50
130
16,699 15,667
20.5
16.4
4,889
4,689
11,810 10,978
3,114
3,212
8,696
7,766
81.4
72.8
1,170
564
7,526
7,202
2,985
2,565
4,542
4,636
53.1
59.3
FY17
4QE
15,619
211
15,830
-7.4
107
15,937
-7.0
4,603
11,335
3,308
8,026
-3.6
515
7,512
2,630
4,882
51.7
56,395
891
57,286
17.8
181
57,467
17.9
22,938
34,529
12,503
22,026
48.9
2,816
19,211
7,411
11,799
45.7
(INR M)
FY18E
60,989
950
61,939
8.1
350
62,289
8.4
19,507
42,782
12,710
30,073
36.5
2,315
27,759
10,187
17,572
48.9
March 2018
14

March 2018 Results Preview | Sector: Financials
PNB Housing Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
PNBHOUSI IN
165.6
211 / 3
1715 / 1006
7 / -22 / -6
CMP: INR1,273 TP: INR1,750 (+37%)
Buy
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
BV/Sh. (INR)
RoAA (%)
RoE (%)
Payout (%)
P/E (x)
P/BV (x)
Div. Yield (%)
2017 2018E 2019E 2020E
10.0
15.1
21.0
27.4
9.1
15.1
20.9
27.6
5.2
8.4
11.2
14.6
31.6
50.9
67.5
88.1
329.5 369.8 423.2 492.9
1.4
1.5
1.4
1.3
13.8
14.6
17.0
19.2
22.8
20.9
20.9
20.9
40.3
25.0
18.9
14.5
3.9
3.4
3.0
2.6
0.5
0.7
1.0
1.2
The company will continue its robust growth trajectory. AUM is
expected to grow 12% QoQ and 55% YoY to INR644b.
Calculated margins are likely to decline ~40bp YoY/ 14bp QoQ to
2.9%, led by a decline in yields.
As a result, total income is expected to grow 37% YoY to INR5.5b.
Asset quality is likely to remain largely stable. GNPL ratio in the
prior quarter was 0.42%.
We estimate provisions of INR594m as against INR561m in 3QFY18.
PAT is expected to grow 53% YoY to INR2.33b.
The stock trades at 3x FY19E and 2.6x FY20E BV. Maintain
Buy.
Key issues to watch for
Management commentary on business growth and steps taken to
sustain AUM growth.
Impact of RERA.
Plans of branch expansion.
Movement in yields and margins, with declining cost of funds.
Quarterly performance (INR m)
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Other income
Total Income
YoY Growth (%)
Operating Expenses
YoY Growth (%)
Operating Profits
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Profit after tax
YoY Growth (%)
Loans growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
8,172
6,080
2,092
457
2,549
797
1,752
280
1,472
513
959
FY17
2Q
9,130
6,847
2,284
572
2,856
1,008
1,848
-225
2,073
696
1,377
3Q
9,376
6,731
2,645
611
3,257
870
2,387
308
2,079
702
1,378
41.2
26.7
33.7
4Q
10,106
6,779
3,327
654
3,981
898
3,083
667
2,416
892
1,524
41.8
22.6
36.9
31.3
34.8
35.3
33.6
1Q
10,965
7,529
3,436
64.2
958
4,394
72.4
1,082
35.7
3,312
89.1
481
2,831
984
1,848
92.6
42.4
24.6
34.7
FY18E
2Q
12,225
8,361
3,865
69.2
933
4,798
68.0
1,101
9.2
3,697
100.1
503
3,194
1,114
2,080
51.1
51.2
23.0
34.9
3Q
13,357
9,250
4,107
55.2
1,029
5,136
57.7
1,237
42.2
3,899
63.3
561
3,339
1,164
2,175
57.8
61.1
24.1
34.9
4QE
14,685
10,310
4,375
31.5
1,080
5,455
37.0
1,293
44.0
4,162
35.0
594
3,568
1,239
2,330
52.9
61.1
23.7
34.7
FY17
36,785
26,437
10,348
45.3
2,294
12,642
50.6
3,573
41.7
9,069
54.5
1,029
8,040
2,803
5,237
60.0
41.8
28.3
34.9
FY18E
51,233
35,450
15,783
52.5
4,000
19,783
56.5
4,712
31.9
15,070
66.2
2,138
12,932
4,500
8,432
61.0
61.1
23.8
34.8
March 2018
15

March 2018 Results Preview | Sector: Financials
Repco Home Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
REPCO IN
62.6
36 / 1
923 / 515
2 / -16 / -32
CMP: INR573
TP: INR740 (+29%)
Buy
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
BV/Sh. (INR)
RoAA (%)
RoE (%)
Payout (%)
Valuation
P/E (x)
P/BV (x)
Div. Yield (%)
18.9
3.0
0.4
16.8
2.6
0.4
14.2
2.2
0.4
12.0
1.9
0.5
2017 2018E 2019E 2020E
3.7
3.3
1.8
29.1
181.8
2.2
17.4
0.0
4.3
3.8
2.1
32.9
212.4
2.2
16.7
7.1
4.8
4.3
2.4
39.0
248.7
2.3
16.9
7.0
5.5
5.0
2.9
46.0
291.5
2.3
17.0
7.0
Our interactions at the ground level suggest that the issues
related to property registration in Tamil Nadu (TN) are being
sorted out, but slowly. However, lack of availability of sand still
remains an issue. Hence, we expect loan growth to remain
subdued at 11% in 4QFY18.
Calculated margins are likely to remain stable at 5.1% on account
of stable cost of funds. As a result, NII growth will be 12% YoY.
C/I ratio is expected to decline almost 150bp YoY to 16.7%.
GNPL is expected to improve seasonally. Provisions are expected
to be INR164m v/s INR194m in the prior quarter.
The stock trades at 2.3x FY19E and 2x FY20E BV. Maintain
Buy.
Key issues to watch for
Sand price trends in TN.
Competitive environment and prepayments by borrowers.
Business outlook, loan growth, and share of home loans and
LAP.
Movement in borrowing costs and margins.
Asset quality trends in the LAP segment.
REPCO: Quarterly performance
Y/E March
Interest Income
Interest Expenses
Net Interest Income
YoY Growth (%)
Other income
Total Income
YoY Growth (%)
Operating Expenses
YoY Growth (%)
Operating Profits
YoY Growth (%)
Provisions
Profit before Tax
Tax Provisions
Profit after tax
YoY Growth (%)
Borrowings growth (%)
Cost to Income Ratio (%)
Tax Rate (%)
E: MOSL Estimates
1Q
2,390
1,550
840
26.5
80
920
26.0
149
-3.5
771
33.9
179
592
196
395
30.8
25.3
16.2
33.2
FY17
2Q
2,499
1,597
902
22.0
98
1,000
22.0
163
-6.8
837
29.9
127
710
253
457
17.0
22.6
16.3
35.7
3Q
2,589
1,682
907
16.2
67
974
15.5
163
1.9
811
18.7
96
714
250
464
20.4
21.1
16.8
35.0
4Q
2,663
1,635
1,028
20.7
73
1,102
16.8
200
30.7
902
14.1
116
786
280
506
19.8
15.6
18.2
35.6
1Q
2,587
1,628
959
14.2
71
1,030
12.0
171
14.9
859
11.4
167
692
241
452
14.2
11.7
16.6
34.8
FY18E
2Q
2,715
1,622
1,093
21.2
95
1,188
18.8
179
9.4
1,009
20.6
166
843
285
559
22.3
8.9
15.0
33.7
FY17
3Q
2,694
1,623
1,071
18.1
82
1,153
18.3
217
33.0
935
15.3
194
741
256
485
4.4
6.9
18.9
34.6
4QE
2,830
1,683
1,146
11.5
87
1,233
11.9
206
3.1
1,027
13.9
164
862
298
564
11.5
9.0
16.7
34.6
10,140
6,463
3,677
21.1
319
3,996
19.8
676
5.1
3,320
23.3
519
2,802
979
1,823
21.4
15.6
16.9
35.0
(INR M)
FY18E
10,826
6,557
4,269
16.1
334
4,603
15.2
773
14.5
3,830
15.4
691
3,139
1,080
2,059
13.0
0.0
16.8
34.4
March 2018
16

March 2018 Results Preview | Sector: Financials
Shriram City Union Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
SCUF IN
65.9
146 / 2
2648 / 1867
13 / 3 / -16
CMP: INR2,222
TP: INR2,550 (+15%)
Buy
Financial Snapshot (INR b)
Y/E March
NII
PPP
PAT
EPS (INR)
EPS Gr. (%)
BV/Sh. (INR)
RoA (%)
RoE (%)
Payout (%)
Valuations
P/E (x)
P/BV (x)
Div. Yield (%)
2017 2018E 2019E 2020E
28.5 34.7 39.3
45.5
17.2 20.9 23.5
27.3
5.6
7.6
9.1
11.0
84
115
139
167
5
37
20
21
763
860
977 1121
2.7
3.2
3.4
3.5
11.7 14.2 15.1
15.9
7.0 16.0 16.0
14.0
26.3
2.9
0.7
19.3
2.6
0.7
16.0
2.3
0.8
13.3
2.0
0.9
We expect no change in disbursements sequentially or annually
and model for a disbursement of INR63b, resulting in 16% YoY
AUM growth.
Calculated spreads should expand 60bp YoY on account of
declining cost of funds. Hence, NII growth is expected to grow
22% YoY.
Higher growth in operating expenses (32% YoY) is expected to
taper PPoP growth to 16% YoY.
We expect asset quality to remain largely stable. We factor in
provisions of INR2.8b as against INR2b in 3QFY18 and INR4.1b in
4QFY17.
The stock trades at 2.3x FY19E and 2x FY20E BVPS.
Buy.
Key issues to watch for
Trends in asset quality in each segment.
Business growth and momentum, and management
commentary on the same.
Impact of GST.
Performance of the housing finance subsidiary.
Quarterly Performance
Y/E MARCH
FY17
FY18E
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4QE
Interest Income
10,535 11,153 11,557 11,071 12,175 12,849 13,381 13,066
Interest expenses
3,672
3,802
3,933
3,937
4,019
4,125
4,224
4,355
Net Interest Income
6,863
7,351
7,624
7,134
8,156
8,725
9,157
8,711
Y-o-Y Growth (%)
19.7
22.1
17.7
14.6
18.9
18.7
20.1
22.1
Fees and Other Income
15
3
6
5
17
4
152
13
Net Operating Income
6,878
7,354
7,630
7,139
8,174
8,728
9,308
8,724
Y-o-Y Growth (%)
19.2
22.1
17.8
11.8
18.8
18.7
22.0
22.2
Operating Expenses
2,739
2,829
2,977
2,815
3,197
3,316
3,859
3,710
Operating Profit
4,139
4,525
4,653
4,324
4,976
5,412
5,449
5,014
Y-o-Y Growth (%)
21.3
29.3
19.5
26.2
20.2
19.6
17.1
16.0
Provisions
1,356
1,390
2,242
4,118
1,998
2,372
2,046
2,778
Profit before Tax
2,784
3,135
2,412
206
2,978
3,041
3,404
2,237
Tax Provisions
966
1,090
835
86
1,040
1,058
1,148
819
Net Profit
1,818
2,045
1,577
120
1,939
1,983
2,255
1,418
Y-o-Y Growth (%)
23.1
34.3
-9.5
-78.4
6.6
-3.0
43.0 1,080.3
Int Exp/ Int Earned (%)
34.9
34.1
34.0
35.6
33.0
32.1
31.6
33.3
Cost to Income Ratio (%)
39.8
38.5
39.0
39.4
39.1
38.0
41.5
42.5
Tax Rate (%)
34.7
34.8
34.6
41.6
34.9
34.8
33.7
36.6
E: MOSL Estimates; * Quarterly nos and full year nos will not tally due to different way of reporting financial nos
FY17
43,796
15,344
28,452
19.1
76
28,528
18.2
11,359
17,168
25.8
8,632
8,536
2,976
5,561
5.0
35.0
39.8
34.9
(INR m)
FY18E
51,471
16,722
34,749
22.1
185
34,934
22.5
14,082
20,852
21.5
9,193
11,659
4,064
7,595
36.6
32.5
40.3
34.9
March 2018
17

March 2018 Results Preview | Sector: Financials
Shriram Transport Finance
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel Perf. (%)
SHTF IN
226.9
335 / 5
1543 / 898
12 / 33 / 23
CMP: INR1,477
TP: INR1,750 (+25%)
Buy
Financial Snapshot (INR b)
Y/E March
2017 2018E 2019E 2020E
Net Inc.
55.2 66.8 76.4 88.1
PPP
43.7 53.1 60.7 70.3
PAT
12.6 17.6 23.8 28.6
EPS (INR)
55.4 77.5 104.8 125.9
EPS Gr. (%)
6.7 39.8 35.3 20.2
BV/Sh (INR)
498
556 642.4 746.2
RoA on AUM (%)
2.0
2.6
3.1
3.2
RoE (%)
11.7 14.7 17.5 18.1
Payout (%)
20.9 17.4 17.4 17.4
Valuations
P/E (x)
26.6 18.8 13.9 11.7
P/BV (x)
3.0
2.6
2.3
2.0
Div. Yield (%)
0.7
0.8
1.1
1.3
SHTF’s AUM growth is expected to sustain at 18% YoY in 4QFY18.
The company will continue to benefit from declining cost of
funds, which should help offset yield pressure. We expect
calculated NIM on AUM to improve ~40bp YoY to 7.7%.
As a result, NII growth is expected to be strong at 25% YoY.
Operating expenses are likely to grow 38.5% YoY, resulting in a
200bp+ YoY increase in C/I ratio.
Asset quality is expected to remain stable. We factor in INR8.7b
provisions v/s INR5.9b in 3QFY18 and INR9.1b in 4QFY17.
The stock trades at 2.3x FY19E and 2x FY20E BVPS. Maintain
Buy.
Key issues to watch for
CV demand in FY19, volume gain on BS4 to BS6 switch.
Movement in borrowing costs and margins.
Asset quality trends, given impact of GST.
Quarterly Performance
Y/E March
FY17
FY18E
1Q
2Q
3Q
4Q
1Q
2Q
3Q
Interest Income
24,764 24,626 24,438 24,185 26,198 26,761 27,573
Interest expenses
13,165 13,358 12,825 12,746 12,835 13,082 13,540
Net Interest Income
11,598 11,268 11,613 11,440 13,364 13,679 14,033
YoY Growth (%)
15.5
8.9
1.5
-10.2
15.2
21.4
20.8
Securitisation income
1,876
2,262
2,508
2,647
2,488
2,645
3,061
Net Income (Incl. Securitization)
13,474 13,530 14,121 14,087 15,852 16,324 17,094
YoY Growth (%)
18.6
13.4
6.9
-2.4
17.6
20.6
21.1
Fees and Other Income
167
169
183
240
218
324
221
Net Operating Income
13,641 13,699 14,304 14,327 16,070 16,647 17,315
YoY Growth (%)
18.4
12.8
6.8
-2.1
17.8
21.5
21.1
Operating Expenses
3,341
3,138
2,905
2,903
3,379
3,485
3,828
Operating Profit
10,300 10,561 11,398 11,424 12,691 13,162 13,486
YoY Growth (%)
19.6
15.6
12.7
6.4
23.2
24.6
18.3
Provisions
4,603
4,621
6,105
9,114
5,823
5,879
5,854
Profit before Tax
5,697
5,940
5,293
2,310
6,869
7,283
7,633
Tax Provisions
1,956
2,063
1,834
813
2,382
2,492
2,676
Net Profit
3,741
3,877
3,460
1,496
4,487
4,791
4,956
YoY Growth (%)
16.5
14.7
-7.8
4.0
19.9
23.6
43.3
AUM Growth (%)
23.6
19.1
14.6
8.2
9.1
13.5
18.0
Securitization Inc. / Net Inc. (%)
13.7
16.5
17.5
18.5
15.5
15.9
17.7
Cost to Income Ratio (%)
24.5
22.9
20.3
20.3
21.0
20.9
22.1
Tax Rate (%)
34.3
34.7
34.6
35.2
34.7
34.2
35.1
E: MOSL Estimates; * Quarterly nos and full year nos will not tally due to different way of reporting financial nos
FY17
4QE
27,956
13,471
14,485
26.6
3,058
17,543
24.5
223
17,766
24.0
4,022
13,744
20.3
8,655
5,088
1,792
3,297
120.3
18.0
17.2
22.6
35.2
(INR M)
FY18E
98,013 108,489
52,094 52,928
45,919 55,561
3.1
21.0
9,293 11,252
55,212 66,813
8.8
21.0
758
986
55,970 67,798
8.7
21.1
12,288 14,714
43,682 53,084
13.8
21.5
24,443 26,211
19,239 26,873
6,666
9,342
12,573 17,531
6.7
39.4
8.2
18.0
16.6
16.6
22.0
21.7
34.6
34.8
March 2018
18

NOTES
March 2018
19

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 becomes inconsistent with the investment rating legend, the Research Analyst shall within 28 days of the inconsistency, 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 Securities Ltd. (MOSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOSL, 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. MOSL is a subsidiary company of Motilal Oswal Financial Service Ltd. (MOFSL). MOFSL is a listed public company, the details in respect of
which are available on
www.motilaloswal.com.
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) 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 Securities Limited are available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/Associate%20Details.pdf
MOSL, it’s associates, Research Analyst or their relative may have any financial interest in the subject company. MOSL and/or its associates and/or Research Analyst may have beneficial ownership of 1% or more securities in the subject company at
the end of the month immediately preceding the date of publication of the Research Report. MOSL 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 MOSL even though there
might exist an inherent conflict of interest in some of the stocks mentioned in the research report. Research Analyst may have served as director/officer, etc. in the subject company in the last 12 month period. MOSL and/or its associates may have
received any compensation from the subject company in the past 12 months.
In the last 12 months period ending on the last day of the month immediately preceding the date of publication of this research report, MOSL or any of its associates may have:
a)
managed or co-managed public offering of securities from subject company of this research report,
b)
received compensation for investment banking or merchant banking or brokerage services from subject company of this research report,
c)
received compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company of this research report.
d)
Subject Company may have been a client of MOSL or its associates during twelve months preceding the date of distribution of the research report.
MOSL and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report. To enhance transparency, MOSL has incorporated a Disclosure of Interest Statement in
this document. This should, however, not be treated as endorsement of the views expressed in the report. MOSL 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 MOSL 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.
Terms & Conditions:
This report has been prepared by MOSL 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 MOSL. 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. MOSL will not treat recipients as customers by
virtue of their receiving this report.
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.
Disclosure of Interest Statement
Analyst ownership of the stock
Companies where there is interest
No
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 MOSL or
its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOSL 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
MOSL & 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 Securities Limited (MOSL) 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 MOSL 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 MOSL, 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.,
MOSL 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
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a subsidiary of Motilal
Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the Financial Advisers Regulations and the
Securities and Futures Act (Chapter 289), as amended from time to time. In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
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 determine the merits and risks of such an investment. The investment discussed or views expressed may not be suitable for all investors. Certain transactions -including
those involving futures, 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.
MOSL, 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 MOSL. 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 MOSL 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 MOSL or any of its affiliates or employees from, any and all responsibility/liability arising from such misuse and agrees not to hold MOSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSL
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.: 022-3980 4263; www.motilaloswal.com. Correspondence Address: Palm Spring Centre, 2nd Floor, Palm
Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 3080 1000. Compliance Officer: Neeraj Agarwal, Email Id: na@motilaloswal.com, Contact No.:022-38281085.
Registration details of group entities.: MOSL: SEBI Registration: INZ000158836 (BSE/NSE/MCX/NCDEX); CDSL: IN-DP-16-2015; NSDL: IN-DP-NSDL-152-2000; Research Analyst: INH000000412. AMFI: ARN 17397. Investment Adviser:
INA000007100.IRDA Corporate Agent-CA0541. Motilal Oswal Asset Management Company Ltd. (MOAMC): PMS (Registration No.: INP000000670) offers PMS and Mutual Funds products. Motilal Oswal Wealth Management Ltd. (MOWML): PMS
(Registration No.: INP000004409) offers wealth management solutions. *Motilal Oswal Securities Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Bond, NCDs, Insurance and IPO products. * Motilal Oswal Commodities Broker Pvt. Ltd. offers
Commodities Products. * Motilal Oswal Real Estate Investment Advisors II Pvt. Ltd. offers Real Estate products. * Motilal Oswal Private Equity Investment Advisors Pvt. Ltd. offers Private Equity products
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