lt-financeholdings crisil 2014 analysis

8/10/2019 Lt-financeholdings Crisil 2014 Analysis

1/14

RESEARCH

CRISILIERIndependent Equity Research

Enhancing investment decisions

L&T FinanceHoldings Ltd

Q4FY14 Results Update


2/14

CRISILIER Independent Equity Research

Explanation of CRISIL Fundamental and Valuation (CFV) matrix

The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process Analysis

of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental grade is assigned on a

five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The valuation grade is assigned on a five-

point scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP).

CRISILFundamental Grade Assessment

CRISILValuation Grade Assessment

5/5 Excellent fundamentals 5/5 Strong upside (>25% from CMP)

4/5 Superior fundamentals 4/5 Upside (10-25% from CMP)

3/5 Good fundamentals 3/5 Align (+-10% from CMP)

2/5 Moderate fundamentals 2/5 Downside (negative 10-25% from CMP)

1/5 Poor fundamentals 1/5 Strong downside (


3/14

RESEARCH

L&T Finance Holdings LtdAUM growth healthy; weak macro environment impacted asset quality

Fundamental Grade 4/5 (Superior fundamentals)

Valuation Grade 3/5 (CMP is aligned)

Industry Diversified finance

1

April 29, 2014

Fair Value 70

CMP 68

For detailed initiating coverage report please visit: www.ier.co.in

CRISIL Independent Equity Research reports are also available on Bloomberg (CRI ) and Thomson Reuters.

L&T Finance Holdings Ltds (LTFHs) Q4FY14 results were in line with CRISIL Researchs

expectations. Net interest income (NII) grew 10% q-o-q (19% y-o-y) to 5.4 bn driven bystrong growth in assets under management (AUM) and improvement in mix towards higher

yielding products. Op-ex increased 0.8% q-o-q to 2.2 bn primarily because of integration of

Family Credit in Q3. Provisions were down 4% q-o-q (+37% y-o-y) to 1.2 bn despite

deterioration in asset quality because some NPAs in the infra book were restructured,

resulting in lower provision. Adjusted PAT grew 70% q-o-q (6% y-o-y) to 1.9 bn. The

investment management business has turned PAT positive in FY14. We largely maintain our

earnings estimates and fundamental grade of 4/5.

Healthy AUM growth driven by infra lending, B2C business and housing financeAUM grew 6% q-o-q (20% y-o-y) to 400 bn driven by growth across segments. Within the

retail and mid-market segment, growth came from lending to B2C businesses tractors,

microfinance and passenger vehicles (PV) to capitalise on strong growth in rural economy

and improving market share in the PV market. This was offset by a cautious lending

approach towards the construction equipment (CE) and commercial vehicle (CV) sectors.

Consequently the mix of B2C products in the retail and mid-market finance loan bookincreased 2 pps q-o-q (8 pps y-o-y) to 40%. Housing finance AUM grew primarily due to good

disbursement growth in the quarter. In the infra lending segment as expected, disbursement

growth was muted for the full year because of macro-policy related challenges.

Net interest margin (NIM) was flat y-o-y but improved 30 bps sequentiallyLTFHs NIM was flat y-o-y at 5.6% in Q4, but up 30 bps sequentially. NIM was flat y-o-y due

to improvement in the mix of higher yielding B2C products offset bya fall in NIM in the infra

lending segment because of rising NPAs which resulted in non-accrual of interest on NPAs.Also, the approach to lending to operational projects, and to large ticket and high quality

borrowers albeit at a lower yield, also impacted NIM in the infra lending segment. The

sequential improvement in NIM was not only driven by improvement in mix of B2C products,

but also driven by run-down of high cost debt.

Asset quality impacted due to a weak macro environment in the infra segmentLTFHs Gross non-performing assets (GNPA%) rose 30 bps sequentially to 3.2% in Q4. This

was due to fresh slippages in the infra segment due to prevailing sector issues. Themanagement guided that even some of the power projects that are operational are under

stress due to issues relating to fuel supply and delay in payments from electricity boards.

Consequently, GNPA% in the infra segment rose to 3.1% in Q4 from 2.4% in Q3FY14. The

restructured book has also risen to 6.8% in Q4, up 80 bps q-o-q. On the other hand, in the

retail & mid-market financing segment, there was 12 bps q-o-q improvement in GNPA% to

3.4%. We foresee stress on LTFHs asset quality over the next two quarters and expect slight

improvement from 2HFY15.

FY15-16 earnings estimates retained; fair value increased to 70We largely retain our earnings estimates. We roll forward our valuation year to FY16,

because of which our sum-of-the-parts (SoTP)-based fair value is increased to 70 per share.

At the current market price of 68, our valuation grade is 3/5.

KEY FORECAST (CONSOLIDATED)

mn FY12 FY13 FY14# FY15E FY16ETotal operating income 12,353 15,910 21,671 25,931 32,084

Pre-provision profit 8,794 10,610 13,312 17,381 22,113

Adjusted net profit 4,548 5,125 5,969 8,591 11,837

Adj EPS () 2.7 3.0 3.5 5.0 6.9

Adj. BV (per share) 25.8 33.6 34.6 41.1 49.7

P/E (x) 25.6 16.0 19.6 13.6 9.9

P/ABV (x) 2.6 2.3 2.4 2.1 1.8

RoE (%) 12.1 10.1 10.6 14.0 16.9

RoA (%) 2.0 1.6 1.5 1.8 2.1

Net NPA (%) 1.3 1.4 2.3 2.1 1.8

Capital adequacy ratio (%) 18.1 20.9 18.2 18.2 17.5

# Based on abridged financials

Source: Company, CRISIL Research estimates

CFV MATRIX

KEY STOCK STATISTICSNIFTY/SENSEX 6761/22632

NSE/BSE ticker L&TFH/LNTFH

Face value (per share) 10

Shares outstanding (mn) 1718

Market cap (bn)/(US$ bn) 117/2

52-week range ()/(H/L) 88/53

Beta 1.29

Free float (%) 19%

Avg daily volumes (30-days) 16,721,153

Avg daily value (30-days) (mn) 1,231

SHAREHOLDING PATTERN

PERFORMANCE VIS--VIS MARKETReturns

1-m 3-m 6-m 12-m

LTFH -8% -1% -10% -12%

CNX 500 2% 13% 14% 16%

ANALYTICAL CONTACTMohit Modi (Director) [email protected]

Ankit Hakhu [email protected]

Vishal Rampuria [email protected]

Client servicing desk

+91 22 3342 3561 [email protected]

1 2 3 4 5

1

2

3

4

5

Valuation Grade

FundamentalGrade

PoorFundamentals

ExcellentFundamentals

Stro

ng

Down

side

Stro

ng

Ups

ide

82.5% 82.5% 82.5% 81.5% 76.6%

2.6% 2.8% 2.8% 3.0%4.4%

0.9% 0.9% 0.8% 0.9%0.8%

13.9% 13.8% 13.9% 14.6% 18.2%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Mar-13 June-13 Sep-13 Dec-13 Mar-14

Promoter FII DII Others


4/14


2

Q4FY14 results summary (consolidated)

mn Q4FY14 Q3FY14 Q4FY13 q-o-q (%) y-o-y (%) FY14 FY13 y-o-y (%)

AUM 40,080 37,820 33,310 6.0% 20.3% 40,080 33,310 20.3%Interest income 13,540 12,839 11,030 5.5% 22.8% 50,569 38,722 30.6%

Interest expense 8,180 7,969 6,505 2.6% 25.8% 30,758 23,286 32.1%

Net interest income 5,360 4,870 4,525 10.1% 18.5% 19,811 15,436 28.3%

Non-interest income 774 245 431 216.1% 79.6% 1,860 1,226 51.7%

Total operating income 6,134 5,115 4,956 19.9% 23.8% 21,671 16,662 30.1%

Operating expenses 2,243 2,226 1,774 0.8% 26.4% 8,359 5,590 49.5%

Employee costs 673 749 630 -10.1% 6.8% 2,736 2,049 33.6%

Other expenditure 1,570 1,477 1,144 6.3% 37.2% 5,622 3,541 58.8%

Cost to income 40.1% 47.4% 39.6% -7bps 1bps 42.3% 37.5% 5bps

Pre-provision profit (PPP) 3,891 2,889 3,182 34.7% 22.3% 13,312 11,072 20.2%

Provision & contingency 1,152 1,197 843 -3.8% 36.7% 4,262 2,731 56.0%

Profit before depreciation and tax 2,739 1,692 2,339 61.9% 17.1% 9,050 8,341 8.5%Depreciation on fixed assets 219 201 187 9.0% 17.4% 801 651 23.1%

Exceptional items - - (38) NM NM 0 2,196 NM

PBT 2,519 1,491 2,113 69.0% 19.2% 8,249 9,886 -16.6%

Provision for tax 661 400 407 65.1% 62.6% 2,300 2,594 -11.3%

Profit before share from associates 1,858 1,090 1,707 70.5% 8.9% 5,948 7,292 -18.4%

Share of profit/loss associates 7.2 6.7 7.4 6.4% -3.1% 21 13 59.8%

Reported profit 1,865 1,097 1,714 70.1% 8.8% 5,969 7,305 -18.3%

Extraordinary gain / (loss) - - (38) NM NM - 2,196 NM

Adjusted net profit 1,865 1,097 1,752 70.1% 6.4% 5,969 5,109 16.8%

No. of equity shares (mn) 1,718 1,718 1,717 0.0% 0.1% 1,718 1,717 0.1%

Adj EPS () 1.09 0.64 1.02 70.0% 6.3% 3.47 2.98 16.7%

Source: Company, CRISIL Research

AUM growth healthy... ... driven by infra and retail & mid-market financing

Source: Company, CRISIL Research Source: Company, CRISIL Research

262 277 312 333 343 355 378 401

37%

27%

31% 30%31%

28%

21% 20%

0%

5%

10%

15%

20%

25%

30%

35%

40%

-

50

100

150

200

250

300

350

400

450

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

(bn)

AUM y-o-y growth %

151 155 164182 186 188 196 206

111 121133

148 152 159166

17622

23 5

816

19

-

50

100

150

200

250

300

350

400

450

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

(bn)

Retail & mid-market financing Infrastructure financing Housing finance


5/14

L&T Finance Holdings Ltd

3

RESEARCH

NIM flat y-o-y but improved sequentially

Improving mix of high yielding B2C* business (as a % of

retail & mid market financing portfolio)


*B2C business comprises rural products, PV and microfinance


Gross non-performing assets % rose sequentially Restructured book in the infra segment increased 80 bps


Capital adequacy ratio comfortable Trend in RoE


5.3% 5.5%5.3%

5.6% 5.6% 5.6%5.3%

5.6%

5.5%5.7% 5.8%

6.2% 6.2% 6.3%6.3% 6.5%

5.0%5.2%

4.7% 4.7% 4.7% 4.7%

4.2%4.4%

3.0%

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

Overall Retail & mid-market financingInfrastructure f inancing

21% 20% 19% 17% 15% 14% 14% 11%

14% 14% 12% 11% 10% 9% 8%7%

20% 18% 23%21% 20% 21% 24%

25%

6% 6% 6%6% 6% 5% 5% 6%

1% 1% 1%1% 1% 2% 2% 2%

29% 27% 28%26%

25% 26% 24% 24%

9%10% 11%

9% 11% 11% 11% 13%

4% 10% 12% 12% 13% 13%

0%

20%

40%

60%

80%

100%

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

CE CV Rural Products

Supply Chain Microfinance Loans and leasesCapital Market Products PV

1.6%

2.3%

2.0%

2.5%

2.9% 2.9%

3.2%

1.8%2.0%

2.1%

2.5%

3.4% 3.4%3.5%

3.4%

1.4% 1.5%

1.8%

1.5% 1.5%

2.4% 2.4%

3.1%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

Overall Retail & mid-market financing

Infrastructure financing

1.3%

3.1%3.7% 3.9%

5.3%6.0%

6.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14

Restructured book %

16.2%

15.5%

16.5%

17.5%

16.7%

16.2%15.9%

16.6%

16.2%16.0%

16.8%

15.8% 15.9%

16.7%

17.7% 17.8%

14.0%

14.5%

15.0%

15.5%

16.0%

16.5%

17.0%

17.5%

18.0%

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

Retail & mid-m arket financing Infra f inancing

12.0%

13.2% 14.2%

15.9%

11.3%

12.2%12.7%

9.0%10.1%

14.0%14.5%

10.3%9.6%

8.9%

15.9%

17.0%

15.6%

18.8%

13.1%

15.9%

9.5%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%18.0%

20.0%

Q1FY13

Q2FY13

Q3FY13

Q4FY13

Q1FY14

Q2FY14

Q3FY14

Q4FY14

Overall Retail & mid-market financing

Infrastructure f inancing


6/14


4

Share price movement Fair value movement since initiation

-Indexed to 100

Source: NSE, CRISIL Research Source: NSE, BSE, CRISIL Research

0

20

40

60

80

100

120

140

160

180200

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

Oct-12

Dec-12

Feb-13

Apr-13

Jun-13

Aug-13

Oct-13

Dec-13

Feb-14

Apr-14

CNX 500 LTFH

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

0

10

20

30

40

50

60

70

80

90

26-Feb-14

03-Mar-14

08-Mar-14

13-Mar-14

18-Mar-14

23-Mar-14

28-Mar-14

02-Apr-14

07-Apr-14

12-Apr-14

17-Apr-14

22-Apr-14

27-Apr-14

('000)(

)

Total Traded Quantity (RHS) CRISIL Fair Value LNTFH


7/14


5

RESEARCH

Earnings Estimates largely maintained (consolidated)

FY15E FY16E

Earlier Revised Change Earlier Revised Change

AUM 501,947 489,788 -2% 622,649 607,487 -2%

Net interest income 22,812 22,844 0% 28,207 27,823 -1%

Non interest income 3,390 3,088 -9% 4,733 4,261 -10%

Total operating income 26,203 25,931 -1% 32,940 32,084 -3%

Operating expenses 7,653 8,551 12% 9,179 9,971 9%

Pre- provision profit (PPP) 18,549 17,381 -6% 23,761 22,113 -7%

Provision & contingency 4,712 4,945 5% 4,726 5,068 7%

Profit before depreciation and tax 13,837 12,436 -10% 19,035 17,044 -10%

Depreciation on fixed assets 337 337 0% 374 372 0%

PBT 13,499 12,099 -10% 18,661 16,672 -11%

Provision for tax 4,455 3,509 -21% 6,158 4,835 -21%

Reported net profit 9,045 8,591 -5% 12,503 11,837 -5%

Adjusted net profit 9,045 8,591 -5% 12,503 11,837 -5%

Adjusted EPS 5.3 5.0 -5% 7.3 6.9 -5%

Adjusted BVPS 42.0 41.1 -2% 51.0 49.7 -3%

GNPA % 2.9% 3.0% 9 bps 2.5% 2.6% 8 bps

NNPA % 1.8% 2.1% 33 bps 1.6% 1.8% 22 bps

Source: CRISIL Research estimates

Reasons for changes in estimates

Line item FY15 and FY16

AUM Largely maintained. Following marginally lower-than-expected AUM growth in the infra segment and higher-than-

expected growth in the retail and mid-market segment, we have lowered our AUM estimates for FY15 and FY16

slightly

Total operating income Largely maintained

PAT Largely maintained. Following higher than expected operating expenses in the full year, we have increased our

operating expenses estimates for FY15 and FY16. Tax rate has been lowered for FY15 and FY16 because of tax

benefit available to infra lending subsidiary because of its IFC status.


8/14


6

Valuation Grade: 3/5

We have rolled forward our valuation year to FY16. We continue to use the SoTP method to

value LTFH and have increased our fair value to 70 per share because of the roll forward.

29 per share Retail and mid market. The retail and corporate finance business

(including housing finance) has been valued at a P/B multiple of 1.3x FY16E adjusted

book value per share of 24 to arrive at a fair value of 29.

32 per share Infra lending. The infra lending business has been valued at a P/B

multiple of 1.6x FY16E adjusted book value per share of 23 to arrive at a fair value of

34.

7 per share Investment management.We have valued the investment management

business at 5% of its expected FY15 AUM of 213 bn.

2 per share Other businesses including wealth management.

At the current market price, our valuation grade is 3/5 indicating that the market price is

aligned to the current levels.

One-year forward P/B band P/E movement

Source: NSE, CRISIL Research Source: NSE, CRISIL Research

0

20

40

60

80

100

120

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

Oct-12

Dec-12

Feb-13

Apr-13

Jun-13

Aug-13

Oct-13

Dec-13

Feb-14

Apr-14

()

LNTFH 1.3x 1.6x 2.0x 2.5x

0

5

10

15

20

25

Aug-11

Oct-11

Dec-11

Feb-12

Apr-12

Jun-12

Aug-12

Oct-12

Dec-12

Feb-13

Apr-13

Jun-13

Aug-13

Oct-13

Dec-13

Feb-14

Apr-14

(Times)

1yr Fwd PE (x) Median PE

+1 std dev

-1 std dev


9/14


7

RESEARCH

Peer comparison

Name of company

CMP M.Cap (bn)P/B (x) RoE (%) RoA (%)

FY14 FY15E FY16E FY14 FY15E FY16E FY14 FY15E FY16ERural Electrification Corporation 243 240 1.2 1.0 0.9 24.3 22.5 21.4 3.3 3.1 3.0

Power Finance Corporation 185 245 0.9 0.8 0.7 22.7 20.8 19.1 3.2 3.0 2.9

IDFC 116 175 1.1 0.9 0.9 13.2 13.5 5.2 2.7 2.9 0.8

Infrastructure finance NBFCs 1.1 0.9 0.9 22.7 20.8 19.1 3.2 3.0 2.9

M&M Financial services 250 142 2.7 2.3 2.0 19.3 19.2 20.1 3.1 3.3 3.2

Shriram Transport 762 173 2.1 1.8 1.5 16.6 18.0 18.1 2.5 2.5 2.5

Shriram City Union 1,129 67 2.1 1.8 1.5 19.8 17.5 18.7 3.0 2.8 3.1

Bajaj Finance 1,865 94 2.3 1.9 1.6 19.9 20.5 20.8 3.6 3.5 3.5

Sundaram Finance 742 82 3.4 2.2 1.9 19.1 21.3 20.8 3.0 3.1 3.0

Cholamandalam Investment 292 42 1.9 1.6 1.4 17.6 18.8 20.8 1.8 1.8 1.9

Magma Fincorp 80 15 1.0 0.9 0.8 10.2 13.0 14.5 1.1 1.4 1.5

Asset financing NBFCs 2.1 1.8 1.5 19.1 18.8 20.1 3.0 2.8 3.0

HDFC 884 1,380 5.0 4.5 3.9 20.7 21.7 22.8 2.6 2.6 2.6LIC Housing Finance 269 136 1.6 1.6 1.4 18.8 18.9 19.1 1.5 1.5 1.5

Housing finance NBFCs 3.3 3.0 2.7 19.8 20.3 21.0 2.0 2.0 2.1

State Bank of India 2,103 1,570 1.1 1.0 0.9 10.5 11.5 12.7 0.7 0.7 0.8

Bank of Baroda 825 354 1.0 0.9 0.8 13.5 13.7 14.4 0.8 0.8 0.8

Punjab National Bank 798 289 0.9 0.8 0.7 11.2 12.9 14.2 0.7 0.8 0.9

Canara Bank 294 136 0.5 0.5 0.4 9.5 10.9 12.0 0.5 0.6 0.6

Union Bank 158 99 0.6 0.5 0.5 9.9 11.4 11.9 0.5 0.6 0.5

PSU Banks 0.9 0.8 0.7 10.5 11.5 12.7 0.7 0.7 0.8

HDFC Bank 718 1,723 4.1 3.4 2.8 21.3 22.1 22.9 1.9 2.0 2.0

ICICI Bank 1,265 1,461 2.0 1.8 1.7 14.1 14.1 14.9 1.7 1.7 1.7

Kotak Mahindra Bank 813 626 3.4 2.9 2.5 14.6 14.9 15.5 2.1 2.2 2.3

Axis Bank 1,530 719 1.8 1.7 1.4 17.4 16.7 17.2 1.7 1.6 1.7

IndusInd Bank 488 257 2.9 2.5 2.2 16.9 17.8 19.2 1.8 1.8 1.9

Yes Bank 456 164 2.1 1.9 1.6 25.0 23.2 22.8 1.6 1.5 1.6

Private Sector Banks 2.5 2.2 1.9 17.2 17.3 18.2 1.7 1.7 1.8

L&T Finance Holding 68 117 2.4 2.1 1.8 10.6 15.0 17.5 1.5 1.9 2.2

CRISIL IER reports released on L&T Finance Holdings Ltd

Date Nature of report

Fundamental

grade Fair value

Valuation

grade

CMP

(on the date of report)

26-Feb-14 Initiating Coverage 4/5 65 2/5 76

28-Apr-14 Q4FY14 Result Update 4/5 70 3/5 68


10/14


8

Annexure: Financials (Consolidated)

Financials have been classified according to CRISIL standards

# Based on abridged financials

Source: CRISIL Research

Income Statement Ratios

(mn) FY12 FY13 FY14# FY15E FY16E FY12 FY13 FY14# FY15E FY16E

Net Interest Income 11,475 14,396 19,811 22,844 27,823 Spread Analysis

Non Interest Income 878 1,514 1,860 3,088 4,261 Yield on AUM 13.2% 12.8% 13.8% 13.6% 13.6%

Total Operating Income 12,353 15,910 21,671 25,931 32,084 Cost of borrowings 9.2% 9.4% 9.6% 9.9% 10.2%

Operating Expenses 3,560 5,300 8,359 8,551 9,971 Spread 4.0% 3.4% 4.2% 3.7% 3.3%

Staff Costs 1,518 2,057 2,736 3,120 3,625 Net Interest Margin (NIM) 5.3% 4.9% 5.4% 5.1% 5.1%

Other Operating Expenses 2,042 3,244 5,622 5,431 6,346 Return Ratios

Pre- provision profit (PPP) 8,794 10,610 13,312 17,381 22,113 ROA (%) 2.0% 1.6% 1.5% 1.8% 2.1%

Provision & Contingency 1,834 2,734 4,262 4,945 5,068 ROE (%) 12.1% 10.1% 10.6% 14.0% 16.9%

Profit before depreciation and tax 6,959 7,875 9,050 12,436 17,044 Growth ratios

Depreciation On Fixed Assets 117 169 801 337 372 Assets under Management (AUM) 45.1% 29.8% 20.3% 22.2% 24.0%

Extra-ordinary gain / (Loss) - 2,193 21 - - Disbursements -10.7% 4.4% 12.9% 11.0% 17.5%

PBT 6,842 9,899 8,269 12,099 16,672 Net Interest Income 12.2% 25.5% 37.6% 15.3% 21.8%

Provision for tax 2,295 2,594 2,300 3,509 4,835 Non Interest Income 34.6% 72.4% 22.9% 66.0% 38.0%

Reported Net Profit 4,548 7,305 5,969 8,591 11,837 Total Operating Income 13.5% 28.8% 36.2% 19.7% 23.7%

Extra-ordinary gain / (Loss) - 2,180 - - - Operating Expenses 40.2% 48.9% 57.7% 2.3% 16.6%

Adjusted Net Profit 4,548 5,125 5,969 8,591 11,837 Staff Costs 60.9% 35.5% 33.1% 14.0% 16.2%

Pre- provision profit (PPP) 5.4% 20.6% 25.5% 30.6% 27.2%

Provision & Contingency 10.0% 49.1% 55.9% 16.0% 2.5%

Balance sheet Adjusted Net Profit 14.5% 12.7% 16.5% 43.9% 37.8%

(mn) FY12 FY13 FY14# FY15E FY16E Adjusted EPS -5.4% 12.6% 16.4% 43.9% 37.8%

Equity share capital 17,148 17,168 17,184 17,184 17,184 Book Value 37.5% 31.0% 9.7% 17.8% 19.2%

Preference capital - 7,500 10,000 15,000 20,000 Asset Quality

Total Share Capital 17,148 24,668 27,184 32,184 37,184 Gross NPA % 2.1% 2.2% 3.2% 3.0% 2.6%

Reserves 29,964 37,119 40,656 47,754 58,099 Net NPA (%) 1.3% 1.4% 2.3% 2.1% 1.8%

Shareholders Funds 47,111 61,786 67,841 79,938 95,284 Valuation DataP/E (x) 25.6 16.0 19.6 13.6 9.9

Borrowings 211,813 284,792 358,536 406,447 503,676 P/ABV (x) 2.6 2.3 2.4 2.1 1.8

Other Liabilities & Provisions 9,213 17,757 21,817 28,796 32,426 Key Parameters

Deferred tax liability 199 121 121 121 121 Total lending AUM (bn) 257 333 401 490 607

Sources of funds 268,337 364,457 448,314 515,301 631,507 Disbursements (bn) 220 230 260 288 339

Capitalisation ratios (calc)

Cash & Bank Balances 1,127 3,716 7,827 (363) (967) Capital adequacy ratio 18.1% 20.9% 18.2% 18.2% 17.5%

Investments 7,749 18,500 27,303 20,102 20,964 Tier I capital ratio 17.6% 17.4% 15.4% 14.5% 13.5%

Net Loans and advances 251,904 324,501 388,936 472,495 585,125 Tier II capital ratio 0.6% 3.5% 2.9% 3.7% 4.0%

Net Fixed Assets and Capi tal WIP 2,820 9,572 7,287 10,904 11,869 Efficiency ratio

Deferred tax asset 809 1,390 2,295 2,295 2,295 Cost to Income ratio 29.8% 34.4% 42.3% 34.3% 32.2%

Other Assets 3,938 6,778 14,666 9,869 12,221 Opex/ average assets 1.7% 1.9% 2.5% 2.0% 1.9%

Application of funds 268,347 364,457 448,315 515,301 631,507 Leverage (x) - D/E 4.5 5.4 6.4 6.5 7.0

Per share (mn) Q4FY13 Q1FY14 Q2FY14 Q3FY14 Q4FY14

FY12 FY13 FY14# FY15E FY16E Total operating income 4,956 4,937 5,485 5,115 6,134

Adj EPS () 2.7 3.0 3.5 5.0 6.9 Change (q-o-q) 23% 0% 11% -7% 20%

Adj Book Value () 25.8 33.6 34.6 41.1 49.7 Adjusted PAT 1,714 1,449 1,557 1,097 1,865

Dividend per share () - 0.7 0.7 0.8 0.7 Change (q-o-q) -42% -15% 7% -30% 70%

Actual o/s s hares 1,715 1,717 1,718 1,718 1,718 Adjusted EPS 1.0 0.8 0.9 0.6 1.1

Quarterly Financials - Consolidated


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RESEARCH

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