01-01-1970 12:00 AM | Source: Motilal Oswal Financial Services Ltd
Buy Aditya Birla Capital Ltd For Target Rs. 140 - Motilal Oswal
News By Tags | #4265 #872 #448 #4315 #1302

Follow us Now on Telegram ! Get daily 10 - 12 important updates on Business, Finance and Investment. Join our Telegram Channel

https://t.me/InvestmentGuruIndiacom

Download Telegram App before Joining the Channel

Steady quarter; pro forma GNPLs decline

* PAT grew 15% YoY to INR2.9b in 3QFY21, led by healthy performance in the HFC and AMC segments. However, the same was offset by muted performance in the NBFC segment. In 9MFY21, PAT has been largely flat at INR7.5b.

* The Lending business witnessed healthy business recovery with total disbursements (including HFC) jumping 18% YoY to INR51b. The company restructured 1.9% of its loan book (including Housing Finance)

 

Loan book stable; pro forma GNPL ratio declines

* Contrary to the declining trend over the past six quarters, the loan book remained stable QoQ at INR457b. The share of Retail and SME lending increased ~100bp sequentially to 53%. Within Retail lending, the share of unsecured loans declined 400bp YoY to 47%.

* As the company resolved INR5.5b GNPLs in 3QFY21, pro forma GNPL ratio improved 40bp QoQ to 3.1%. However, PCR declined 600bp QoQ to 39%, while Stage 1/2 provisions were steady at 1%. Collection efficiency improved to 96.4% in Dec’20 from 92% in Oct’20. ABCAP restructured 1.5% of loans.

* NIM + fees remained largely stable at 5.2% in the NBFC segment. Excluding some one-off adjustments, NIM would have improved 30bp to 5.6%. The cost of funds is down to a multi-quarter low of 7.5%.

* In the Housing Finance business, the loan book was down ~2% QoQ to INR119b. Pro forma GNPL ratio jumped 75bp QoQ to 1.9%, while PCR declined to 34% from 37%. The company restructured 3.2% of the loan book. It has 0.7% Stage 1/2 provisions on the Balance Sheet.

* Over the next three years, ABCAP targets to grow its NBFC loan book at 15-17% CAGR, with the share of Retail AUM increasing to 65% from 53% at present. It expects to deliver over 2.5%/16% RoA/RoE by FY24.

 

AMC segment – equity share stable; cost rationalization continues

* After an 11% sequential increase in 2QFY21, QAAUM increased 7% to INR2.7t in 3Q. The share of equity AUM is largely stable at 33%. SIP registrations rose 28% QoQ and were almost at prior year levels. SIPs now comprise 43% of equity AUM v/s 37% YoY.

* The company continues to cut operating costs – total opex is down 11-12% in 3Q/9MFY21. PBT margin improved 3bp QoQ to 30bp (fresh high).

* Over FY21-24, ABCAP targets 12-15% AUM CAGR, with the share of equity funds increasing to 40% from 34%. This should drive 15% PBT CAGR along with 35-40% RoE (v/s 33% currently).

 

Strong performance in the Life Insurance business

* The Life Insurance business continues to outperform peers on growth. Individual FYP has grown 6% YoY in 9MFY21 to INR13.4b for the company (v/s a decline of 8% YoY for the industry).

 

To Read Complete Report & Disclaimer Click Here

 

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412

 

Above views are of the author and not of the website kindly read disclaimer