Hold Edelweiss Financial Services Ltd For Target Rs.166 - Emkay Global
Now Get InvestmentGuruIndia.com news on WhatsApp. Click Here To Know More
Consolidation in the offing
* Edelweiss Financial Services (EDEL) continued to consolidate its advances, with ~3.6% yoy growth in AUM to Rs435.1bn amid tight liquidity conditions and an adverse macro environment. We expect the slowdown to persist; assume ~12% FY19-21E AUM CAGR.
* EDEL has improved its overall borrowing profile with decline in CPs and rise in NCD/Banks. However, the gradual shift toward low-yield retail lending, along with tight liquidity and rating downgrades, should keep margins under pressure for FY20/21E
* Although asset quality has remained stable sequentially, we do factor in elevated credit cost of ~140bps for FY20-21, considering the current stress in the developer finance segment and the continuing tight liquidity situation.
* We downgraded EDEL last quarter, factoring in risks involved in the wholesale business and the tight liquidity situation. We cut our FY20 earnings estimates by ~12.1% and TP to Rs166 (1.7x P/B FY21E). We have an UW position on EDEL in our NBFC–EAP.
For More Emkay Global Financial Services Ltd Disclaimer http://www.emkayglobal.com/Uploads/disclaimer.pdf & SEBI Registration number is INH00000035
Above views are of the author and not of the website kindly read disclaimer