Quote on Shriram City Union By Jyoti Roy, Angel Broking
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Below are Quote on Shriram City Union By Mr. Jyoti Roy - DVP- Equity Strategist, Angel Broking Ltd
Shriram City Union Finance is part of the Shriram group and is in the high margin business of lending to small businesses which account for 57.3% of the loan book as of end FY20. The company also provides auto, 2 wheeler, gold, and personal loans. The company posted a good set of number s for the quarter due to positive surprise on the asset quality front. NII for Q3FY21 was down by 1.3% YoY to Rs. 876.5 crore while PPOP was down by 2.2 YoY to Rs. 560 crore. provision during the quarter was down by 13% qoq to Rs. 175.5 crore while profits were down by 5.7% yoy to Rs. 280 crore. SCUF reported a strong 50% sequential growth in disbursement for the quarter which led to a 3.7% qoq growth in AUM to ~ Rs. 28,500 crore. SCUF surprised positively on the asset quality front Gross stage 3 loans decreased by 20bps qoq to 6.5% in Q3FY21. Net stage 3 for the quarter was stable at 3.3% while PCR ratio stood at 52.7%. We believe that the worst is over for the company and expect the company to achieve the management’s target of mid teen growth for FY22. We are positive on the company as we believe that the worst is over in terms of asset quality which along with positive growth momentum should lead to a rerating for the company. Hence we recommend a BUY on the stock with a target price of Rs. 1800.
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