8/8/2019 GRUH Finance Result Analysis (Q2'11)

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GRUH Finance (Q211 Result Update)

HOLDMarket Data

nt Market Price (INR) 412

t Price (INR) 450

e Potential ~ 9%

GRUH Finance continued with its strong growth in disbursements and loan bowhich grew by 70.6% and 25% respectively on a YoY basis. However Net IntereIncome (NII) has declined by 6.77% sequentially and 4.07% on YoY basis mainly du

to contraction in net interest margin.

Growth in loan portfolio remains strong

et Capitalization (In INR Mn) 14312 which grew by 70.6% YoY and 26% QoQ.

Net Interest Margins declined, but on expected linesDuring this quarter, GRUHs NIMs has declined by 45bps to 3.65% on the back higher bank borrowing cost and lower yields on incremental lending. The monetatightening has led to an increase in the cost of funds, which has gone up from 8.1%

Promoter

dual

%

ShareHolding

STOCK SCAN

ode 511288

. . . .

for FY12.

Overall Asset Quality remains strong, however deteriorates on QoQ basisThe Gross NPA has declined by 15.5% on a YoY basis and currently stood at INR 374Mn which is 1.37% of the total loan portfolio. GRUH continues to maintain exceprovisions resulting in zero net-NPA position for the company as on Q211. Howev

Promoter

group

61.4%

tutions

0%

orporate

bodies

2%

Code GRUH

mberg Ticker GRHF.IN

rs Ticker GRUH.BO

Value (INR) 10

y Share Capital (INR. Mn.) 347.3

ge P/E/PBV 12.98/2.92

focus on non-salaried segment which results into asset quality deterioration.

ValuationGRUH is currently trading at a PEx of 14.01 & P/BVx of 3.4 based on the FY

expected earnings. We assigned it a target price of INR 450, which is 3.7 times its FYexpected book value. We recommend a HOLD for GRUH, mainly because of recent run up and stretched valuation.

.

ge Daily Volumes (6 M) 78540

end Yield (%) 1.56

Return (1 Yr) 111.8%

0.0

0.0

0.0

Particulars (inMn) 2008 2009 2010 2011E 201Total Income 807.00 930.00 1,281.00 1,640.32 2,016

Growth 38.4% 15.2% 37.7% 28.0% 22.

NII 670.00 606.00 956.00 1,160.97 1,398

Growth% 66% -9.6% 57.8% 21.4% 20.

0.0

0.0

0.0

0.0

0.0 Net Profit 410.00 493.00 647.00 832.12 1,020

Growth% 46.4% 20.2% 31.2% 28.6% 22.

EPS 11.82 14.21 18.65 23.98 29

P/E 34.87 29.00 22.10 17.18 14

NIM% 3.32% 2.40% 3.60% 3.59% 3.4

ROE 23.90% 22.30% 24.50% 24.30% 24.2

Microsec ReseaSource: Company, Microsec Research

23rd October 2010

asasmal@microsec.in

ru nance .c ose . . . .

NNPA% 0 0 0 0

BV 54.97 63.66 76.25 96.64 121

P/BV 7.49 6.47 5.40 4.26 3

8/8/2019 GRUH Finance Result Analysis (Q2'11)

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8/8/2019 GRUH Finance Result Analysis (Q2'11)

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DisclaimerThis document is prepared by the research team of Microsec Capital Ltd. (hereinafter referred as MCL) circulated for purelinformation purpose to the authorized recipient and should not be replicated or quoted or circulated to any person in any formThis document should not be interpreted as an Investment / taxation/ legal advice. While the information contained in threport has been procured in good faith, from sources considered to be reliable, no statement in the report should be consideredto be complete or accurate. Therefore, it should only be relied upon at ones own risk. MCL is not soliciting any action based othe report. No indication is intended from the report that the transaction undertaken based on the information contained in th

report will be profitable or that they will not result in losses. Investors must make their own investment decisions based on theispecific investment objectives and financial position and using such independent advisors, as they believe necessary. We and ouaffiliates, officers, directors, and employees, including persons involved in the preparation or issuance of this material may: (afrom time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein o(b) be engaged in any other transaction involving such securities and earn brokerage or other compensation discussed herein oact as advisor or lender I borrower to such company (ies) or have other potential conflict of interest with respect to anyrecommendation and related information and opinions. The same persons may have acted upon the information contained here.

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e t er t e rm, nor ts rectors, emp oyees, agents, representat ves s a e a e or any amages w et er rect oindirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with thuse of the information.

23rd October 2010