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INSTITUTIONAL EQUITY RESEARCH

Page | 1 | PHILLIPCAPITAL INDIA RESEARCH

Please see penultimate page for additional important disclosures. PhillipCapital (India) Private Limited. (“PHILLIPCAP”) is a foreign broker-dealer unregistered in the USA. PHILLIPCAP research is prepared by research analysts who are not registered in the USA. PHILLIPCAP research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities Inc, an SEC registered and FINRA-member broker-dealer.

Financials

Base Effect in Play

INDIA | FINANCIALS | Q4FY19 Results Preview

5 April 2019

Our banking universe will see +22% yoy (+5% qoq) growth in net interest income, driven by improvement in credit growth and stability in NIMs. Within this PSU banks will report strong performance with NII growth of +24% yoy (on lower base).

Pre-provision profit to increase by 23% yoy (+13% qoq). Pre-provision profit for retail bank is expected to witness a growth of +23% yoy (5% qoq), while that of PSU banks is expected to report +33% growth.

Slippage to remain in line with 9M19, however slippages to come mainly from corporate account while Retail and Agri slippages should moderate. This, along with few small ticket recoveries should keep GNPA stable. We expect GNPA (%) to decline by c.45bps qoq in Q3 to 10.5% for the system.

Higher provisions (with aging of NPAs) and absence of any major recovery in quarter will continue to keep credit cost high.

NII of housing-finance companies will grow at moderate pace of 3% yoy due to NIM contraction and moderation in loan growth. The liquidity crisis post IL&FS rating downgrade has impacted the cost of fund for wholesale borrowers. Barring top rated housing finance companies, the growth for the other lot was impacted significantly.

Retail continues to drive credit growth: Credit growth remained stable at around 15%, driven by Services (NBFC) and Retail (unsecured). Corporate growth continues to remain muted at c.5%. Deposit growth remained stable at 9.5% during the quarter, below credit growth resulting in higher C/D ratio of 78% (at 5 year high)

Treasury gain to moderate: While long term rate (10 Yr G-Sec) remaining flat during the quarter, short term rate (Gsec-1-5 yr) declined in the range of 50-20bps, resulting in steepening of yield curve. With banks repositioning their bond portfolio towards shorter duration, this should bring some trading gains (although lower than 3Q19).

NIMs to continue to trend upwards: We believe MCLR has peaked as most of banks have started to reduce their MCLR in the range of 5-10 bps (suggesting lower incremental COFs), we expect margins to expand as benefits from previously hiked MCLR will continue to drive loan yield higher. Interest reversal from recovery should also help margins. However banks classifying IL&FS exposure (IIB) as NPA will have negative impact on margin

Asset Quality to remain stable: Slippage should remain in line with 3Q19; fresh addition has been under control for the system which would help in containing GNPA. Recoveries are likely to be granular in absence of big ticket recovery. Capital infusion by GoI in PSU banks will enable them to increase their provisioning coverage as a result we would expect credit cost to remain elevated

We see NII growth for NBFCs under our coverage at a moderate 12% yoy, due to margin contraction, and moderation in AUM growth. Margin to see 5-30bps contraction during the quarter as the larger impact of spike in cost of funds post IL&FS default in September 2018, would have been felt during the quarter. While gold‐loan NBFCs are likely to see stable growth, asset-financing NBFCs to witness moderation in growth due to weak sales by OEMs across vehicle categories ahead of election. Nevertheless asset quality likely to remain stable as collection efficiency remain high. Election during Q1 and forecast of weak monsoon likely to have negative bearing on management commentary on growth outlook for FY20.

Top result picks:

Banks: Axis, ICICI, SBI and HDFC Bank

NBFCs: Cholamandalam and Muthoot Finance

Manish Agarwalla (+ 9122 6246 4125) Pradeep Agrawal (+ 9122 6246 4113) Sujal Kumar (+ 9122 6246 4114)


FINANCIALS Q4FY19 PREVIEW

Sector Trends

Credit and Deposit Growth Credit Growth Breakup

CP and CDs Outstanding (Rs bn) Spread between 5 Yr GSec and 5 Yr Corp (AAA) bps

Steepening Yield Curve AT1 and Tier II bonds raised during the quarter

64

66

68

70

72

74

76

78

80

0

5

10

15

20

25

30

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Mar

-14

Jun

-14

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

Deposit (%) Credit (%) CD ratio (rhs)

-10

-5

0

5

10

15

20

25

30

35

Feb

-13

May

-13

Au

g-1

3N

ov-

13

Feb

-14

May

-14

Au

g-1

4N

ov-

14

Feb

-15

May

-15

Au

g-1

5N

ov-

15

Feb

-16

May

-16

Au

g-1

6N

ov-

16

Feb

-17

May

-17

Au

g-1

7N

ov-

17

Feb

-18

May

-18

Au

g-1

8N

ov-

18

Feb

-19

Agriculture Industry Retail Services

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17

Ap

r-1

7

Jun

-17

Au

g-1

7

Oct

-17

Dec

-17

Feb

-18

Ap

r-1

8

Jun

-18

Au

g-1

8

Oct

-18

Dec

-18

Feb

-19

CP Outstanding CD Outstanding

0

20

40

60

80

100

120

140

160

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Mar

-14

Jun

-14

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Mar

-19

5.5

6.0

6.5

7.0

7.5

8.0

8.5

G-S

ec 3

M

G-S

ec 1

yr

G-S

ec 2

yr

G-S

ec 3

yr

G-S

ec 4

yr

G-S

ec 5

yr

G-S

ec 1

0yr

30-Mar-19 31-Dec-18 29-Sep-18

14.9

12.5

7.5

6.0 5.0

4.0

2.5

0%

2%

4%

6%

8%

10%

12%

14%

0

2

4

6

8

10

12

14

16 Issue Size Coupon Rate



Weighted average lending rate on fresh Loan Weighted average lending rate on outstanding Loan

Source: RBI, PhillipCapital India Research

Weighted average term deposit rate SBI Term deposit rate vs. corporate bond rate

Median MCLR (%) Bank Wise MCLR Change-bps (Since April 2018)

8

9

10

11

12

13

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

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Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18

Public Sector Banks Private Sector Banks

8

9

10

11

12

13

Jul-

12

Oct

-12

Jan

-13

Ap

r-1

3Ju

l-1

3O

ct-1

3Ja

n-1

4A

pr-

14

Jul-

14

Oct

-14

Jan

-15

Ap

r-1

5Ju

l-1

5O

ct-1

5Ja

n-1

6A

pr-

16

Jul-

16

Oct

-16

Jan

-17

Ap

r-1

7Ju

l-1

7O

ct-1

7Ja

n-1

8A

pr-

18

Jul-

18

Oct

-18

Jan

-19


5.0

5.5

6.0

6.5

7.0

7.5

8.0

8.5

9.0

9.5

Mar

-13

Jun

-13

Sep

-13

Dec

-13

Mar

-14

Jun

-14

Sep

-14

Dec

-14

Mar

-15

Jun

-15

Sep

-15

Dec

-15

Mar

-16

Jun

-16

Sep

-16

Dec

-16

Mar

-17

Jun

-17

Sep

-17

Dec

-17

Mar

-18

Jun

-18

Sep

-18

Dec

-18


4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

12.0

13.0M

ar-0

7

Dec

-07

Sep

-08

Jun

-09

Mar

-10

Dec

-10

Sep

-11

Jun

-12

Mar

-13

Dec

-13

Sep

-14

Jun

-15

Mar

-16

Dec

-16

Sep

-17

Jun

-18

Mar

-19

SBI TD Rate (1-2 Yr) Corp Bond (AAA -1 Yr)

7.5

8.0

8.5

9.0

9.5

10.0

Ap

r-1

6

Jun

-16

Au

g-1

6

Oct

-16

Dec

-16

Feb

-17

Ap

r-1

7

Jun

-17

Au

g-1

7

Oct

-17

Dec

-17

Feb

-18

Ap

r-1

8

Jun

-18

Au

g-1

8

Oct

-18

Dec

-18

Feb

-19

Public Private

97

75 70

65

55 50 45

35 30 25

20

0

20

40

60

80

100

120

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BR

BL

Ban

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Kar

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Bank Valuation (P/Adj BV vs. RORWA-FY20) Bank Valuation (P/Adj BV vs. RORWA-FY21)

Source: Company, PhillipCapital India Research

ICICI

Axis

KMB

IIB

Yes

HDFC

SBI

DCB

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8

Pri

ce t

o A

dju

sted

Bo

ok

Va

lue

Return on Risk Weighted Assets

ICICI

Axis

KMB

IIB

Yes

HDFC

SBI DCB

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8

Pri

ce t

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dju

sted

Bo

ok

Va

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Return on Risk Weighted Assets



Earnings Estimates

Sector snapshot based on coverage universe (Rs mn) Mar-19E Dec-18 qoq (%) Mar-18 yoy (%)

BANKS

NII 7,60,529 7,27,521 5% 6,22,734 22%

Pre-provision Profit 6,00,918 5,29,465 13% 4,90,053 23%

PAT 1,77,400 1,72,938 2.6% (2,45,678) NA

NBFCs

NII 76,265 72,532 5.1% 68,257 11.7%

Pre-provision Profit 51,208 48,096 6.5% 46,336 10.5%

PAT 25,940 23,236 11.6% 16,223 59.9%

HFCs

NII 63,909 65,679 -3% 62,142 3%

Pre-provision Profit 66,270 63,696 4% 65,747 1%

PAT 47,271 40,648 16% 47,307 0%

Source: Company, PhillipCapital India Research Estimates

Earnings estimates - Banks

(Rs mn) Mar-19E Dec-18 qoq (%) Mar-18 yoy (%) Key expectations

Axis Bank

Net Interest income 57,238 56,037 2.1% 47,305 21.0% Loan growth will bounce back driven by both retail and corporate

NIM to improve on higher loan yield (higher MCLR benefits)

Credit cost to remain elevated due to increase in NPAs from watch list

and below investment grade portfolio.

No major recovery in 3Q19

Pre-provision Profit 54,108 55,247 -2.1% 36,722 47.3%

PAT 16,152 16,809 -3.9% (21,887) na

NIM (%) 3.57 3.47 0.1 3.33 0.24

EPS (Rs) 6.3 6.5 -3.9% (8.5) na

GNPA% 5.5 5.8 -0.3 6.8 -1.3

NNPA% 2.0 2.4 -0.3 3.4 -1.4

Slippages 27770 43370 -36.0% 89360 -68.9%

Bank of Baroda

Net Interest income 49,939 47,432 5.3% 40,023 24.8% Stability in overseas loans book and growth in domestic loans book to

push overall loan book growth

Slippage to moderate in 3Q19. However recovery/upgrade to remain

modest in absence of any major resolutions

Capital infusion of Rs 50 bn by GoI

Bank has also Rs 7.5 bn of Tier II bonds during the quarter


PAT 8,128 4,713 72.5% (31,023) -126.2%

NIM (%) 2.74 2.69 0.05 2.52 0.22

EPS (Rs) 2.7 1.8 50.5% (11.7) -122.8%

GNPA% 10.3 11.0 -0.8 12.3 -2.0

NNPA% 3.9 4.3 -0.4 5.5 -1.6

Slippages 36,000 37,330 -3.6% 1,25,690 -71.4%

Canara Bank

Net Interest income 38,391 38,138 0.7% 29,876 28.5% Higher NII driven by strong credit growth and NIM

NIM to expand as benefit from higher MCLR to kick in. Recoveries will

also provide support

Low specific coverage will warrant high provision for NPA, which will

continue to drag bottom line


PAT 3,260 3,175 2.7% (48,598) -106.7%

NIM (%) 2.75 2.65 0.1 2.42 0.33

EPS (Rs) 4.4 4.3 2.7% (66.3) -106.7%

GNPA% 9.9 10.3 -0.3 11.8 -1.9

NNPA% 6.2 6.4 -0.2 7.5 -1.3

Slippages 25,000 51,090 -51.1% 1,32,420 -81.1%

DCB Bank

Net Interest income 3,013 2,936 2.6% 2,637 14.3% NII growth driven by high credit growth

NIM to contract due to seasonality (Higher allocation to priority sector)

Operating leverage at play with expansion of balance sheet.

stability in asset quality to keep credit cost under check


PAT 870 861 1.1% 642 35.5%

NIM (%) 3.77 3.83 -0.06 4.05 -0.28

EPS (Rs) 2.8 2.8 1.1% 2.1 35.0%

GNPA% 1.8 1.9 -0.1 1.8 0.1

NNPA% 0.7 0.7 0.0 0.7 0.0

Slippages 1,200 1,147 4.6% 814 47.4%




HDFC Bank

Net Interest income 1,29,050 1,25,768 2.6% 1,06,577 21.1% Credit growth to remain strong aided by retail unsecured loan and

commercial vehicle.

NIM to remain stable on higher loan yields

Stable asset quality and credit cost will continue to aid profitability

Opex growth will continue to be lower than balance sheet growth

Pre-provision Profit 1,10,648 1,07,784 2.7% 88,357 25.2%

PAT 57,799 55,859 3.5% 47,993 20.4%

NIM (%) 4.30 4.30 0 4.30 0.00

EPS (Rs) 21.3 20.5 3.5% 18.5 14.9%

GNPA% 1.4 1.4 0.0 1.3 0.1

NNPA% 0.4 0.5 -0.1 0.4 0.0

Slippages 35,000 40,000 -12.5% 28,010 25.0%

ICICI Bank

Net Interest income 71,658 68,753 4.2% 60,217 19.0% Loan growth will be driven by retail loan

NII growth driven by high credit growth and stable margins

NIMs to improve as benefit of higher MCLR starts to kick in

High credit cost to keep bottom line under pressure

Asset quality to show improvement driven by containment of

slippage and better recoveries.

Pre-provision Profit 62,986 61,464 2.5% 75,140 -16.2%

PAT 19,538 16,049 21.7% 10,200 91.5%

NIM (%) 3.50 3.40 0.10 3.24 0.26

EPS (Rs) 3.0 2.5 21.7% 1.6 91.2%

GNPA% 7.5 7.8 -0.3 8.8 -1.4

NNPA% 2.0 2.6 -0.5 4.8 -2.7

Slippages 21,000 20,910 0.4% 1,57,370 -86.7%

Indian Bank

Net Interest income 17,261 17,170 0.5% 16,377 5.4% Credit growth gain momentum driven by RAM segment

NIM to contract due to seasonality (Higher allocation to priority

sector)

In absence of any major recovery, asset quality to remain under

pressure

Bank has also raised Rs 6 bn of Tier II bonds during the quarter


PAT 1,928 1,525 26.4% 1,320 46.1%

NIM (%) 2.82 2.88 -0.1 2.84 -0.02

EPS (Rs) 4.0 3.2 26.4% 2.7 46.1%

GNPA% 7.4 7.5 -0.1 7.4 0.0

NNPA% 4.3 4.4 -0.2 3.8 0.4

Slippages 17,000 17,690 -3.9% 30,210 -43.7%

Indusind Bank*

Net Interest income 23,070 22,881 0.8% 20,076 14.9% Loan growth to surpass industry growth.

Exposure to ILFS parent group to be classified as NPA hence will hit

NIM

Credit cost is expected to be high on provisions on IL&FS exposure

Collection efficiency across retail products satisfactory

Bank has also raised Rs 14.9 bn of AT1 bonds during the quarter


PAT 5,006 9,850 -49.2% 9,531 -47.5%

NIM (%) 3.70 3.83 -0.13 3.97 -0.27

EPS (Rs) 8.3 16.4 -49.1% 15.9 -47.5%

GNPA% 2.0 1.1 0.9 1.2 0.82

NNPA% 0.9 0.6 0.3 0.5 0.41

Slippages 25,000 8,060 210.2% 8,600 190.7%

Kotak Mahindra Bank Mar-19E Dec-18 QoQ (%) Mar-18 YoY (%)

Net Interest income 31,095 29,391 5.8% 25,798 20.5% Credit growth will continue to be strong aided by Corporate and CV

Segment

Savings Deposit should continue to witness strong traction

NII growth driven by credit growth and improving NIMs

Asset Quality to remain stable

Key thing to look out for: Growth Appetite and Outlook for Business

Banking


PAT 13,092 12,906 1.4% 11,241 16.5%

NIM (%) 4.38 4.33 5.0 4.35 3.0

EPS (Rs) 6.87 6.76 1.6% 5.90 16.4%

GNPA% 2.10 2.07 3.2 2.22 (11.8)

NNPA% 0.86 0.71 14.9 0.98 (12.1)

Slippages 5,402 3,450 56.6% 6,010 -10.1%

Punjab National Bank

Net Interest income 44,113 42,901 2.8% 30,634 44.0% NII to remain stable QoQ due to stable margin and loan book

NIM to benefit from Rs 59bn capital infusion by GOI

Credit cost to remain elevated due to high level of GNPA

Pre-provision Profit 31,563 30,999 1.8% (4,474) -805.5%

PAT 2,494 2,465 1.2% (1,34,169) -101.9%

NIM (%) 2.50 2.50 0.0 2.59 -0.09

EPS (Rs) 0.5 0.6 -16.2% (48.6) -101.1%

GNPA% 15.5 16.3 -0.8 18.4 -2.9

NNPA% 7.6 8.2 -0.6 11.2 -3.7

Slippages 40,000 39,880 0.3% 3,09,910 -87.1%

*Number do not factor the merger with Bharat Financial




State Bank of India

Net Interest income 2,43,470 2,26,910 7.3% 1,99,743 21.9% Low double digit loan growth book along with stable NIM to drive NII

Margin to improve marginally on account of higher MCLR and recovery

Slippage will mainly come from watch list

Containment of slippage and strong recovery from power NPA to

improve GNPA/NNPA

Bank has also raised Rs 12.5 bn of AT1 bonds during the quarter

Pre-provision Profit 1,81,100 1,26,250 43.4% 1,58,832 14.0%

PAT 37,882 39,548 na (77,182) -149.1%

NIM (%) 2.82 2.76 2.2% 2.50 12.8%

EPS (Rs) 4.2 4.4 -4.2% (8.7) -149.1%

GNPA% 8.1 8.7 -7.0% 10.9 -25.7%

NNPA% 3.5 4.0 -11.7% 5.7 -39.1%

Slippages 1,00,000 65,410 52.9% 3,28,210 -69.5%

Union Bank

Net Interest income 25,220 22,542 11.9% 21,931 15.0% Flat credit growth on a yoy basis and weak NIM to keep NII subdued

Asset quality to remain elevated in absence of any major recovery

High provision for NPA to erode profitability


PAT 1,017 (841) na (25,539) na

NIM (%) 2.22 2.20 0.02 1.90 0.32

EPS (Rs) 0.6 (0.7) -184.0% (21.9) -102.8%

GNPA% 15.4 15.7 -0.3 15.7 -0.3

NNPA% 8.0 8.3 -0.3 8.4 -0.5

Slippages 25,000 29,830 -16.2% 1,00,430 -75.1%

Yes Bank

Net Interest income 27,010 26,664 1.3% 21,542 25.4% Credit growth is expected to remain muted at c.2% QoQ vs 11% in

2Q19

NIM to remain stable ; We expect NIMs to start rising from FY20

Slippages will be moderate at Rs.9bn

Key thing to look out for: Commentary from the new Management

about growth, Regulatory compliance and Capital raise plans


PAT 10,236 10,019 2.2% 11,794 -13.2%

NIM (%) 3.26 3.30 -4.15 3.40 -14.15

EPS (Rs) 4.4 4.3 3.4% 5.1 -13.5%

GNPA% 2.3 2.1 15.5 1.3 99.0

NNPA% 1.3 1.2 15.2 0.6 69.1

Slippages 9,146 22,970 -60.2% 3,953 131.4%



Earnings estimates – Housing Finance Companies


HDFC Limited

Net Interest income 32,835 28,711 14.4% 28,306 16.0% Company adopted Ind AS accounting standard. Our estimate are based

on Indian GAAP

spread to remain stable as rise in cost would offset by increase in rate

and high corporate loan growth

Dividend received from various subsidiaries. Asset quality to remain

stable

Thing to watch out would be management commentary on its stake in

Bandhan Bank


PAT 28,809 21,138 36.3% 28,462 1.2%

EPS (Rs) 17.0 12.3 38.1% 17.0 0.0%

LIC Housing Finance


on Indian GAAP

Loan growth of 15% to be driven housing loans

Favourable base to reflect NII growth

Asset quality likely to remain stable

Cost of market borrowing witnessed some relief in Q4


PAT 6,261 5,963 5.0% 4,851 29.1%

EPS (Rs) 12.4 11.9 4.0% 10.7 16.1%

Repco Home Finance


on Indian GAAP

Disbursement to improve yoy but decline qoq. Loan growth seen at

lower double digit

NIM will remain stable as increase in yields offsets rise in cost of funds

Seasonally weak quarter from asset quality perspective. Expect some

spike in GNPA

Pre-provision Profit 1,011 938 7.7% 1,009 0.2%

PAT 602 556 8.4% 566 6.4%

EPS (Rs) 9.6 8.9 8.4% 9.0 6.4%

Indiabulls Housing Fin

Net Interest income 13,414 17,876 -25.0% 15,967 -16.0% Company adopted Ind AS accounting standard. Our estimate are based

on Indian GAAP

loan book to witness moderation owing to liquidity crisis during the

quarter under review

NIM to contract as cost of fund witnessed sharp spike

Some loan segment like home loan and construction finance may

remain flat qoq

Provision to decline qoq due to recovery of Rs2bn in Palais Royale

Pre-provision Profit 13,468 16,955 -20.6% 16,547 -18.6%

PAT 9,686 9,855 -1.7% 10,304 -6.0%

EPS (Rs) 22.8 23.1 -1.3% 24.2 -6.0%

Dewan Housing Finance

Net Interest income 5,437 7,517 -27.7% 6,668 -18.5% Company adopted Ind AS accounting standard. Our estimate are based

on Indian GAAP

Loan growth to witness de-growth qoq owing to standstill in new

business impacted by liquidity crisis

Sharp decline in disbursement and sell down of loan will lead to decline

in loan book qoq.

NIM under pressure but asset quality stable

Pre-provision Profit 4,012 6,037 -33.5% 6,099 -34.2%

PAT 1,912 3,136 -39.0% 3,124 -38.8%

EPS (Rs) 6.1 10.0 -39.0% 10.0 -38.8%




Earnings estimates – NBFC


Shriram Transport Fin

Net Interest income 20,637 20,724 -0.4% 18,076 14.2% NII to decline qoq due to moderate disbursements and contraction in

NIMs

Higher cost of funds to drive contraction in NIMs

Asset quality to remain stable


PAT 6,618 6,355 4.2% 1,446 357.7%

NIM (%) 7.8 8.0 -0.17 7.8 -0.01

EPS (Rs) 29.2 28.0 4.2% 6.4 357.7%

Cholamandalam Fin.

Net Interest income 9,050 8,746 3.5% 8,424 7.4% Lower NIMs due to higher cost of funds leads to lower NII growth, even as

AUM growth remain healthy at 23%

Favourable base helps drive operating profit growth


Higher cost of funds to lead to lower NIMs


PAT 3,194 3,044 4.9% 3,001 6.4%

NIM (%) 7.1 7.1 -0.03 8.2 -1.12

EPS (Rs) 20.4 19.5 4.9% 19.2 6.4%

Mah & Mah Finance

Net Interest income 14,229 12,040 18.2% 13,050 9.0% Disbursement growth to moderate further as rural demand weakens

ahead of elections

Higher cost of funds to lead to lower NIMs

Asset quality to improve helped by higher collections


PAT 4,665 3,187 46.4% 4,245 9.9%

NIM (%) 8.8 7.9 0.94 10.1 -1.29

EPS (Rs) 7.6 5.2 46.4% 6.9 9.9%

Shriram City Union Fin

Net Interest income 9,705 9,096 6.7% 8,118 19.5% Favourable base drive NII growth

NIMs to contract 30bps qoq led by higher cost of funds



PAT 2,559 2,588 -1.1% 470 444.2%

NIM (%) 13.3 13.6 -0.30 12.1 1.17

EPS (Rs) 38.8 39.2 -1.1% 7.1 444.2%

Manappuram Finance

Net Interest income 7,508 7,272 3.3% 6,217 20.8% NII growth to remain stable at 20%

Implementation of cellular vaults to drive further reduction in opex


Rising share of lower yielding products and higher cost of funds driving

margin contraction


PAT 2,741 2,472 10.9% 1,832 49.6%

NIM (%) 16.2 16.4 -0.16 15.8 0.43

EPS (Rs) 3.3 2.9 10.9% 2.2 49.6%

Muthoot Finance

Net Interest income 11,694 11,276 3.7% 10,728 9.0% NII to grow by 9% led by 16% growth in AUM


NIMs to contract by 90bps yoy led by higher cost of funds


PAT 5,366 4,852 10.6% 4,515 18.9%

NIM (%) 14.0 13.9 0.11 15.0 -0.92

EPS (Rs) 13.4 12.1 10.6% 11.3 18.8%

Magma Finance

Net Interest income 3,442 3,378 1.9% 3,645 -5.6% Moderate growth in AUM and lower NIMs to keep NII under pressure

NIMs to contract due to higher cost of funds

Favourable base to drive earnings growth


PAT 798 740 7.8% 715 11.6%

NIM (%) 8.2 8.2 -0.01 9.5 -1.32

EPS (Rs) 3.4 3.1 7.8% 3.0 11.6%




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Rating Criteria Definition

BUY >= +15% Target price is equal to or more than 15% of current market price

NEUTRAL -15% > to < +15% Target price is less than +15% but more than -15%

SELL <= -15% Target price is less than or equal to -15%.

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Sr. no. Particulars Yes/No

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No

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