Pick of the Week

RETAIL RESEARCH

28 Oct 2016

L&T Finance Holdings Ltd

Industry

CMP

Recommendation

Add on Dips to band

Sequential Targets

Time Horizon

BFSI

Rs. 106.8

Buy at CMP and add on dips

Rs. 89-93.5

Rs. 120-134

2-3 quarters

HDFC Scrip Code

EQNR

BSE Code

533519

NSE Code

L&TFH

Bloomberg

LTFH IN

CMP as on 28 Oct 16
Eq. Capital (Rs crs)
Face Value (Rs)

106.80
1754.12
10

Equity Sh. Outs (Cr)

175.41

Market Cap (Rs crs)

18734

Book Value (FY16-Rs)

Avg. 52 Week Vol

41.0
4500000

52 Week High

107.75

52 Week Low

48.30

Shareholding Pattern-% (Sep-2016)

Promoters

66.68

Institutions

13.79

Non Institutions

19.53

Total
Research Analyst: Atul Karwa

atul.karwa@hdfcsec.com

100.00

L&T Finance Holdings Ltd. (LTFH) is a financial holdings company offering a diverse range of financial products and services
across retail, corporate, housing and infrastructure finance sectors as well as mutual fund products and investment
management services through its wholly owned subsidiaries. Promoted by Larsen & Toubro, it was incorporated in 1994
and headquartered in Mumbai. With a total loan book size exceeding Rs 57,000 cr and pan-India reach with 700+ points of
presence across 24 states of India, it has built a strong position in the Indian financial services industry.

Investment Rationale

Sale of de-focused business segments to be RoE accretive

Normal monsoons to give impetus to rural demand
Housing Finance to grow at a faster rate
Higher fee income and improving IDF composition to result higher profitability
Lower cost to income; accelerated provisioning will led to ROE improvement
Strong parentage and senior management team

Concerns

High LAP / Construction finance loans might result in higher NPAs

Regulatory changes
Delays in scaling up focused business segments
Higher slippages in wholesale finance book
Sub-optimal RoE in asset management business

Financial Summary
Rs in Cr
NII
PPP
PAT
EPS (Rs)
P/E (x)
P/ABV (x)
RoAA (%)

Q1FY17
934
656
247
1.4

Q1FY16
796
501
214
1.3

YoY (%)
17.4
31.0
15.0
13.0

Q4FY16
841
553
205
1.2

QoQ (%)
11.1
18.6
20.4
19.6

FY15
2628
1693
851
5.0
21.6
3.4
1.8

FY16
3165
2034
854
4.9
21.9
3.1
1.5

FY17E
3721
2541
1066
6.1
17.6
2.8
1.6

FY18E
4386
3050
1391
7.7
14.0
2.4
1.7

(Source: Company, HDFC sec)

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View and Recommendation
LTFH has strong capabilities to raise resources and is now focused on segments which are likely to see strong growth in the
near future. Most of the non-core activities such as car financing leases, SME loans, mid-market, etc will be hived off in
2017 itself for which it has already hired merchant bankers and issued the mandate. The result of focusing on the core and
profitable activities is that the RoEs will surge from the present 10% to around 18-19% by the year 2020 (as per the
management). The focus on reducing the cost to income ratio will also aid profitability. First signs of better times are
available in the latest Q2FY17 numbers. The ROE for the quarter is up at 11.7% vs 9.8% YoY and 9.8% QoQ.
LTFH has put a very clear execution plan a quarter to quarter milestones, for achieving this strategy of raising RoE on
various parameters. At the first stage it will cut costs, at the second stage it will exit many of the businesses that it is not
good in and in the third stage LTFH will achieve growth in its distinctive businesses. In short growth, reduction in cost and
reduction in credit cost will basically take the RoE up. LTFH plans to move out of crowded areas where the NIMs are under
pressure and focus on areas where it thinks it has an advantage. Its capital adequacy at individual businesses is comfortable
between 14% to 21% (including Tier 1 of 10% to 16%). Divestment of defocused assets will give it a cushion of capital going
forward. Bain Capital presently holds 1.8% of L&T Finance. It has invested Rs 118 cr as subscription for warrants which will
give it ~5% stake (convertible at Rs 74 per share likely in Q1FY18). Bain Capital will provide valuable strategic inputs on
business strategy.
We feel investors could buy the stock at the CMP and add on declines to Rs. 89-93.5 band (2x-2.1x FY18E ABV) for
sequential targets of Rs. 120 (2.7x FY18E ABV) and Rs. 134 (3x FY18E ABV) in 2-3 quarters.
Q2FY17 Result Review
Net interest income increased by 17.4% yoy to Rs 934 cr in Q2FY17 driven by strong growth in disbursements. Focused
businesses of LTFH recorded 24% YoY growth mainly through increased disbursements in Microfinance and Housing
Finance. Wholesale Finance has witnessed strong growth in IDF and syndicated assets. Cost-income ratio declined by ~500
bps to 28%. However, higher provisioning and write-offs resulted in lower PAT growth of 15% to Rs 247 cr. LTFH's thrust on
profitable growth is visible as consolidated RoE improved by 188 bps yoy to 11.72% in Q2FY17. Despite continuing
challenges in the macro-economic environment, LTFH has improved Gross NPA% by 40 bps to 4.7%. Provision Coverage has
improved from 22% in Q2FY16 to 36% in Q2FY17. As a result, Net NPA improved by 98 bps yoy to 3.07%.
Particulars
Interest Income
Interest Expenses
Net Interest Income
Non-interest income
Total Income
Operating Expenses
Pre Prov. Profit

RETAIL RESEARCH

Q2FY17
2088
1153
934
54
988
333
656

Q2FY16
1793
998
796
44
840
339
501

YoY (%)
16.4
15.6
17.4
22.4
17.7
-1.9
31.0

Q1FY17
1996
1156
841
34
875
322
553

QoQ (%)
4.6
-0.2
11.1
57.8
12.9
3.3
18.6

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Prov. & Cont.
PBT
Tax
PAT
Adj. PAT
EPS

320
335
89
247
1
1.4

183
317
103
214
1
1.3

74.6
5.7
-13.7
15.0
36.8
13.0

253
300
95
205
3
1.2

26.6
11.9
-6.6
20.4
-45.1
19.6

(Source: Company, HDFC sec)

Company Overview
L&T Finance Holdings Ltd. (LTFH) is a financial holdings company offering a diverse range of financial products and services
across retail, corporate, housing and infrastructure finance sectors as well as mutual fund products and investment
management services through its wholly owned subsidiaries. Promoted by Larsen & Toubro, it was incorporated in 1994
and headquartered in Mumbai. With a total loan book size exceeding Rs 57,000 cr and pan-India reach with 700+ points of
presence across 24 states of India, it has built a strong position in the Indian financial services industry.
L&T Finance was earlier aiming to secure a banking license. This prompted it to get involved in numerous businesses which
included low profit-margin business. This dragged down the RoEs significantly to ~ 10%. However, after it was unable to
secure a banking license, it has reorganized its business over the last one year and is now focused only on profitable
segments. Post the reorganization of business and certain mergers of subsidiaries, LTFH lending business would be focusing
on 3 segments; (i) Rural financing comprising of Farm equipment and related advances, 2W loans and microfinance
business, (ii) Housing Finance comprising of home loans and LAP primarily to self-employed and real estate construction
and last mile finance and (iii) Wholesale finance which includes infrastructure related loans, structured corporate finance
and short term supply chain financing. Besides LTFH has its MF and wealth management business.
Key company milestones
Year
Milestone
1994
L&T Finance incorporated and commences business with focus on offering lease, hire purchase
solutions for SMEs
2004
Starts financing of rural assets tractors and farm equipments
2007
L&T infra Finance established; Entered CV financing segment
2008
Entered into microfinance, loans against shares and distribution of financial products;
Total assets cross Rs 10000 cr
2009
Raised funds first public issue of NCDs by L&T Finance
2010
Acquired MF business of DBS Chola; L&T Infra finance gets IFC status, issues infrastructure bonds
2011
IPO of L&T Finance holdings; Total assets cross Rs 20000 cr
2012
Acquired Fidelitys MF business; Entered housing finance by acquiring Indo Pacific Housing Finance;
Entered 2W finance by acquiring Family Credit; Total assets cross Rs 30000 cr
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2013
2014
2015

Entered into Wealth Management business

Total assets cross Rs 40000 cr
Preferential issue of equity shares and warrants to Bain Capital amounting to Rs 707 cr

Company Structure
After the change in top management in FY16 LTFH has realigned its lending business structure under three verticals viz. (i)
Rural (ii) Housing and (iii) Wholesale and also defocused on few products based on attractiveness, profitability and its ability
to extract value.
Larsen & Toubro
(Promoter)
L&T Financial
Holdings

Lending
Business

Focused
Business
Rural
Finance
Farm
Equipment

Housing
Finance

Investment
Management

De-focused
Business
Wholesale
Finance

Home Loans

Infrastructure
Finance

2-Wheelers

LAP

Structured
Corp. Fin.

Microfinance

Real Estate

Supply
Chain Fin.

Wealth
Management

AMC

Cars
MHCV, SCV,
LCV
Leases, SME
Term Loans
RD

CE
(Source: Company, HDFC sec)

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Key Management Personnel
Name

Brief Profile
He has been providing strategic direction to the financial services business of the
Mr. Y.M. Deosthalee
L&T Group and has been serving as the Chairman (non-executive) of the company
Chairman (Non-executive)
since Sep-11
He has a rich experience of over 25 years across multiple domain in financial services
such as Corporate Banking, Cash Management, Credit Rating, Retail Lending and
Mr. Dinanath Dubhashi
Rural Financing. He joined L&T Financial Services in 2007 and has been instrumental
Managing Director
in scaling up the Retail business operation manifold. Prior to this, he was associated
with BNP Paribas, CARE Rating and SBI Caps in various capacities. He holds a B.E.
(Mechanical) degree and PGDM from IIM Bangalore.
He has 25 years of experience in Sales, Business Development and Operations of
Mr. Kailash Kulkarni
which 20 years has been in financial services. Prior to L&T Mutual Fund he was
Chief Executive Investment Mgmt. associated with Kotak Mahindra Asset Management, Metlife Insurance and ICICI
Group in different capacities and JM Financial. He is on the board of the AMFI.
He has 22 years of rich and diversified experience in various leadership roles in the
Mr. Parvez Mulla
banking and financial services domain. Prior to joining L&T Finance he has worked
Chief Executive Retail Finance
across various companies such as ICICI Bank, Bajaj Auto and ANZ Grindlays. He holds
a Masters Degree from IIM Bangalore.
He has more than 24 years of rich experience in Project Finance, Corporate Finance,
Structured Lending and Stressed Asset Management. He has been instrumental in
Mr. Virender Pankaj
building institutional capabilities in Operating Assets and Renewable Financing. Prior
Chief Executive Wholesale Finance
to joining L&T Financial Services (LTFS), he has associated with SBI for more than 15
years. He holds graduation degree in engineering and PG in MBA (Finance).
He has a rich experience of more than 26 years in the financial services industry.
Under his leadership in June 2015, the Wealth Management has been voted among
Mr. Manoj Shenoy
the top ten Private Banks in India by Asia Money Private Banking poll. Prior to joining
Chief Executive Pvt. Wealth Mgmt.
L&T Financial Services, Mr. Shenoy worked in EFG Bank and Anand Rathi Financial
Services. He is a Graduate Engineer from Bangalore University.
He has 19 years of experience in the financial services & banking industry. He has
Mr. Srikanth JR
held worked in various areas like corporate credit risk, commercial loans / capital
Chief Executive Real Estate &
market products and SME, before taking up the current role. Prior to joining L&T
Supply Chain Finance Financial Services, he was working with BNP Paribas, Dubai. He holds an Engineering
degree and has completed his MBA from IIM, Lucknow.
He has more than two decades of experience across the financial sector. He holds
Mr. Sachinn Joshi
vast knowledge in Accounts, MIS, Audit, Tax, Treasury, Secretarial & Statutory
Chief Financial Officer
Compliances and Admin functions. Prior to joining here, he has worked at Aditya
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Birla Finance Ltd (ABFL), Angel Group of Companies and IL&FS Group. He is a
qualified CA and CWA and has also done his post-graduation in Law

Investment Rationale
Sale of de-focused product segment to be RoE accretive
LTFH has decided to exit the segments wherein it believes it makes sub-optimal returns. Accordingly the company has
decided to unwind its portfolio in CV/CE, mid-market, car loans, SME term loans, etc. The portfolio of de-focussed products
made negative RoE of (23.8%) in Q2FY17 thus bringing down the overall RoE of the consolidated business. De-focussed
segments currently account for ~6.3% of the advances. De-focused business portfolio de-grew by 31% in Q2FY17 to Rs 3817
cr and the management expects 70-80% of this portfolio to be sold/rundown by the end of FY17. Sale of portfolio of these
segments would result in improved margins for the company and lead to RoE improvement as the focused business RoE
stood at over 14% in Q2FY17. Falling interest rates in the system could have a beneficial impact on NIMs as a greater
proportion of its borrowings is on floating rate than lending.
Focus on profitable segments would result in improved return ratios (%)

(Source: Company, HDFC sec)

Normal monsoons to give impetus to rural demand

In rural business the company primarily lends towards income-generating assets across rural and other segments. Farm
equipment and 2W loans are the flagship products under this business and the company has a strong position in in the
market for both these products. LTFH has strong OEM tie-ups, a well-spread network and the ability to offer customised
financing solutions.
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The deficient monsoons in FY16 resulted in shrinking of the tractor financing market and higher delinquencies. LTFH as a
prudent measure reduced its exposure to high risk areas thereby ceding market share by 3%. In 2W loans, while the
industry volume increased by 3% during FY16, LTFH reported a 24% growth in its loan book resulting in an increase in
market share. After two years of deficient rainfalls, the monsoons have been normal in 2016 falling just 3% short of the long
period average. As the market turns positive for tractors the company is confident of recovering its tractor loans and
expects strong growth in 2W financing.
LTFH has defocussed from products like CV/CE loans, mid-market, car loans and SME Term loans and is in the process of
running down or selling these segments. Rural finance portfolio grew by 16.8% yoy in Q2FY17 driven by doubling of
microfinance portfolio and 16% yoy growth in 2W loans. Farm equipment de-grew by 11% in Q2FY17.
Rural Finance share: Focus on higher-yielding microfinance and 2W loans

(Source: Company, HDFC sec)

Rural Business Market Scenario

Segment

Micro Finance

2 Wheelers
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Management discussion
Market expected to grow at 30%-40% annually
Digitized customer acquisition process using mobility solutions. Customer growth
of 60%
100% Aadhar based KYC to minimize multiple lending. Rejection rate up from 2025% to 33%
Markets expected to grow at 10%-12%
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Farm Equipment

Continued focus on profitability by reducing opex and focus on early bucket

collection efficiency exhibiting early results
Enhanced customer proposition through digitization of customer acquisition and
improved TAT
Good monsoon expected to improve sentiments - market growth by 5%-6%
Regaining earlier ceded market share in specific high risk geographies based on
analytics and risk framework
As fundamentals in the sector improve LTFH would push market share and growth
in subsequent quarters
(Source: Company, HDFC sec)

Housing Finance to grow at a faster rate

LTFH entered into the housing finance space with the acquisition of Indo-Pacific Housing Finance in 2012. Its portfolio got a
boost when it acquired the portfolio of CitiFinancial in 2014. The company had concentrated equally on growing both the
housing loans and LAP loans segments. In the housing loans segment LTFH had been maintaining a split of 50:50 between
salaried and self-employed. It has now increased the percentage of self-employed a lot. In fact, it has completely stopped
DSA based salary loans as the competition with banks is very high and margins are very thin. Despite that it has been able to
maintain the run rate quite well and the management is confident of increasing the run rate going forward.
Strong growth in Housing finance book (Rs Cr)

(Source: Company, HDFC sec)

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The Company is scaling up its housing finance business by increasing its geographical spread as well as by increasing market
share in the existing markets. During FY16, it increased the number of markets from where it was sourcing its business to 44
from 30 markets at the end of FY15. Distribution mix among multiple distribution channels such as Direct Sales Associates,
Direct Sales Team, and worksites, which were already contributing to the current business, have been improved. Further
LTFHs housing finance segment gets business from L&T Construction which is one of the leading construction company in
India and works with most of the reputed developers.
Housing Business Market Scenario
Segment
Management discussion
Strategic shift from a much broader segment of customers to primarily selfemployed segment. Disbursement rates steady despite shift.
Home Loans & LAP
Redesigned process has improved TAT
Risk framework strengthened to support this strategy
Pipeline for disbursements remains strong. Substantial sanctions happening in the
last fortnight Q1 resulted in increased disbursement in Q2
Real Estate finance
Primary customer segment - Category A and B developers post receipt of all
project related approvals
(Source: Company, HDFC sec)

Higher fee income and improving IDF composition to result higher profitability
LTFH entered the wholesale finance segment in 2006 with the objective of lending to key infrastructure development
projects with a focus on power, telecom, roads, water and oil & gas. It has been classified as Infrastructure Finance
Company (IFC) and as a Public Finance Institution (PFI) by RBI which enables is it access cheaper funds.
The Wholesale Finance business comprises of infrastructure financing and non-infra wholesale financing through three
lending entities viz. L&T Infrastructure Finance Company Ltd. (L&T Infra Finance), L&T FinCorp Ltd. and L&T Infra Debt Fund
Ltd. (L&T IDF). Post the restructuring the wholesale finance business accounts for 59% of the total advances.
Over the past few years the company has worked to de-risk its wholesale business by focusing more on low-risk renewable
energy and road projects. It has reduced its exposure to corporate loans largely belonging to the EPC segment. The share of
operational projects in the portfolio has also increased over the years and operational projects now account for 61% of the
wholesale advances. This has resulted in margin compression as the same has declined by ~190 bps over FY12-16.
Going forward the company intends to utilize its strong appraisal skills in other infra business by doing large underwriting
deals, selling down and generating fee income. The management sees a strong opportunity in projects coming for refinance
which would result in increasing fee income and expanding RoE.

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Wholesale Business Market Scenario
Segment
Management discussion
Large opportunities available in TOMT model of Roads and in Solar within
renewable energy
Strategy of origination and down sell maintained
Infra Finance
IDF scaled up to ~ Rs 3000 crs of assets (~ Rs 500 crs Q2FY16)
Growth in corporate bond market creating opportunities for origination and down
selling of bonds
Increased opportunities foreseen in structured mezzanine finance
Structured Corporate Finance
Developing structured products for cross vertical sell down synergies
Business continues to demonstrate steady volumes and profitability
Favourable monsoon and the onset of festive season is likely to spur demand in
Supply Chain Finance
the short term
Over the medium term, increased consumption demand and government capital
spending will be the prime growth drivers
(Source: Company, HDFC sec)

Infrastructure finance dominates the wholesale finance book - Q2FY17

(Source: Company, HDFC sec, Data as on Q1FY17)

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Lower cost to income; accelerated provisioning will led to ROEs improvement
We believe LTFHs margins are likely to remain healthy at 6.2% as we believe part of margin expansion from high yielding
segments will be neutralized by financing operational infrastructure projects where the margins are highly competitive.
Further as per managements new strategy, there will be significant decline in cost to income from current 37% to 30% over
longer term. The company has identified most of its stressed assets and undertaken accelerated provisioning on it which
would lead to lower provisioning requirement in the future.
Asset quality in rural business is likely to improve from Q2FY17 onwards as monsoon has played out well in most part.
Further we believe transition to 90 days will not have significant impact on company as segments which are in focus are
doing better across the industry - like Home loan, Micro Finance, 2 Wheeler financing and short term financing to
operational infrastructure projects. As per management, income reversals based on 90 days will be done in FY17 itself
however reporting of Gross / Net NPA based on 90 dpd is likely in FY18.
Asset quality to improve (based on 150 DPD)

(Source: Company, HDFC sec, Data as on Q1FY17)

Improving profitability in asset management business

LTFH entered into asset management business with the acquisition of DBS Cholamandalam AMC in 2010 which it acquired
for Rs 45 cr. It later acquired Fidelitys mutual fund business in 2012 for ~Rs 630 cr. The acquisition has helped the company
to significantly increase its distribution capability. Its average AUM has grown at CAGR of 19% over the last two years. LTFH
AMC business achieved breakeven in Q4FY14 and reported a small profit of Rs 19 cr in FY16. With a buoyant equity markets
MFs have witnessed strong inflows and the companys strategy of keeping the ratio of higher equity assets is likely to result
in higher profits going forward. Further the company may look to monetize its stake in asset management business where it
has created significant value resulting in value unlocking for investors.
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Strong parentage and senior management team
LTFH derives significant competitive advantage over peers because of its parentage. It not only enjoys strong backing from
parent but is also able to leverage L&Ts extensive domain experience (for its loan underwriting business) and strong brand
equity (that helps it to raise funds). L&T, a professionally-run company with decades of experience, has a presence in
almost all infrastructure sectors. L&T holds a controlling stake of 66.68% in the company.
The company derives synergies by leveraging L&Ts industry knowledge in sectors such as engineering and construction
equipment. This knowledge of the parent provides better understanding of the risks in the infra lending segment which, in
turn, helps in prudent underwriting and pricing of loan products.
L&T is a strong and a respected brand in the infrastructure space. The parents brand equity thus helps LTFH to raise
resources from diverse investors to meet the capital requirement of its subsidiaries (and also to keep CAR under control).
E.g. the company raised Rs 750 cr of preference capital, at 8.75% yield, in FY13 and Rs 1245 cr of equity capital through an
IPO in FY12 (which was subscribed 5.2x), pre-IPO placement and retail NCD issues as well as infra bonds on the debt side.
Moreover, the company has a strong credit rating of AA+ (from CARE and ICRA) for its debt instruments, largely due to
parent, as one of the factors. Its subsidiaries also enjoy a relatively strong credit rating. This helps the subsidiaries to keep
their borrowing costs low.

Concerns
Higher LAP / Construction finance loans might result in higher NPA
Higher share of LAP and construction finance loans in the overall housing finance portfolio could result in elevated NPA in
case of economic slowdown. Further the company is focusing on self-employed loans which have volatile cash flows which
could lead to higher NPAs and provisioning requirement in case of prolonged economic slowdown.
Regulatory changes
Regulatory changes like increase in risk weights for a certain category, cap on interest rates under refinance could mar the
growth and profitability of the company.
Delays in scaling up business segment
Inability to scale-up its microfinance and 2W portfolios, which are the key growth drivers in rural finance would cap the
expected expansion in RoE.
Higher slippages in wholesale finance book
Wholesale finance still accounts for a chunk of LTFHs advances and higher than estimated slippages from restructured
assets would impact profitability of the company.

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Sub-optimal RoE in asset management business
Almost 10% of the consolidated networth of the company is invested in the asset management business which is making
sub-optimal RoE which could further deteriorate in case of equity markets slowdown.

View and Recommendation

LTFH has strong capabilities to raise resources and is now focused on segments which are likely to see strong growth in the
near future. Most of the non-core activities such as car financing leases, SME loans, mid-market, etc will be hived off in
2017 itself for which it has already hired merchant bankers and issued the mandate. The result of focusing on the core and
profitable activities is that the RoEs will surge from the present 10% to around 18-19% by the year 2020 (as per the
management). The focus on reducing the cost to income ratio will also aid profitability. First signs of better times are
available in the latest Q2FY17 numbers. The ROE for the quarter is up at 11.7% vs 9.8% YoY and 9.8% QoQ.
LTFH has put a very clear execution plan a quarter to quarter milestones, for achieving this strategy of raising RoE on
various parameters. At the first stage it will cut costs, at the second stage it will exit many of the businesses that it is not
good in and in the third stage LTFH will achieve growth in its distinctive businesses. In short growth, reduction in cost and
reduction in credit cost will basically take the ROE up. LTFH plans to move out of crowded areas where the NIMs are under
pressure and focus on areas where it thinks it has an advantage. Its capital adequacy at individual businesses is comfortable
between 14% to 21% (including Tier 1 capital adequacy of 10% to 16%). Divestment of defocused assets will give it a
cushion of capital going forward. Bain Capital presently holds 1.8% of L&T Finance. It has invested Rs 118 cr as subscription
for warrants which will give it ~5% stake (convertible at Rs 74 per share- likely in Q1FY18). Bain Capital will provide valuable
strategic inputs on business strategy.
We feel investors could buy the stock at the CMP and add on declines to Rs. 89-93.5 band (2x-2.1x FY18E ABV) for
sequential targets of Rs. 120 (2.7x FY18E ABV) and Rs. 134 (3x FY18E ABV) in 2-3 quarters.

Financial Statements
Income Statement
(Rs Cr)
Interest Income
Interest Expenses
Net Interest Income
Non interest income
Operating Income
Operating Expenses
Pre Prov. Profit
Prov & Cont

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FY14
5056
3074
1982
181
2163
995
1168
343

FY15E
6196
3568
2628
141
2770
1077
1693
662

FY16
7289
4124
3165
182
3347
1313
2034
781

FY17E
8518
4797
3721
243
3964
1423
2541
974

FY18E
9900
5514
4386
260
4646
1596
3050
1004

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Profit Before Tax
Tax
PAT
Adj. PAT

825
230
595
597

1031
324
707
855

1253
399
854
857

1567
501
1066
1069

2046
655
1391
1395
(Source: Company, HDFC Sec)

Balance Sheet
(Rs Cr)
Eq. Share Capital
Pref. Share Capital
Reserves & Surplus
Shareholder funds
Minority Interest
Borrowings
Other Liab & Prov.
SOURCES OF FUNDS
Fixed Assets
Goodwill on Cons.
Investment
Cash & Bank Balance
Advances
Other Assets
TOTAL ASSETS

FY14
1718
1000
4107
6826
0
35854
2182
44861
729
639
2730
783
38894
1087
44861

FY15E
1720
1363
4656
7740
100
42091
2811
52742
718
639
2649
862
46042
1831
52742

FY16
1753
1213
5442
8409
100
51616
3622
63746
696
639
3563
402
56468
1979
63746

FY17E
1754
1213
6206
9174
100
59947
4301
73522
651
639
4239
522
65220
2250
73522

FY18E
1818
1213
7558
10589
100
72136
5287
88112
615
639
5165
783
78265
2645
88112
(Source: Company, HDFC Sec)

Financial Ratios
Particulars
Return Ratios
Calc. Yield on advances
Calc. Cost of borrowing
Calc. NIM
RoAE
RoAA
Asset Quality Ratios
Gross NPA
Net NPA
PCR %
Growth Ratios

RETAIL RESEARCH

FY14

FY15E

FY16

FY17E

FY18E

14.2%
9.6%
5.6%
8.8%
1.5%

14.6%
9.2%
6.2%
11.8%
1.8%

14.2%
8.8%
6.2%
10.8%
1.5%

14.0%
8.6%
6.1%
12.5%
1.6%

13.8%
8.4%
6.1%
14.7%
1.7%

3.2%
2.3%
28.4%

3.1%
2.1%
32.6%

3.1%
2.1%
33.5%

3.0%
1.8%
38.0%

2.7%
1.7%
39.1%

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RETAIL RESEARCH
Advances
Borrowings
NII
PPP
PAT
Valuation Ratios
EPS
P/E
BVPS
P/BV
Adj. BVPS
P/ABV
Dividend per share
Dividend Yield (%)
Other Ratios
Cost-Income

20.1%
26.9%
22.8%
11.9%
-18.3%

18.4%
17.4%
32.6%
44.9%
43.2%

22.6%
22.6%
20.4%
20.2%
0.2%

15.5%
16.1%
17.6%
24.9%
24.7%

20.0%
20.3%
17.9%
20.1%
30.5%

3.5
30.9
33.9
3.2
28.7
3.7
0.8
0.7

4.9
21.6
37.1
2.9
31.5
3.4
0.8
0.7

4.9
21.9
41.0
2.6
34.5
3.1
0.8
0.7

6.1
17.6
45.4
2.4
38.6
2.8
0.9
0.8

7.7
14.0
51.6
2.1
44.4
2.4
1.0
0.9

46.0

38.9

39.2

35.9

34.3
(Source: Company, HDFC Sec)

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1 year price movement comparison with CNX Finance

1 year forward P/ABV

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RETAIL RESEARCH

Fundamental Research Analyst: Atul Karwa, atul.karwa@hdfcsec.com

RETAIL RESEARCH Tel: (022) 3075 3400 Fax: (022) 2496 5066 Corporate Office
HDFC securities Limited, I Think Techno Campus, Building - B, "Alpha", Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves, Kanjurmarg (East), Mumbai 400 042 Phone: (022) 3075 3400 Fax: (022) 2496 5066
Website: www.hdfcsec.com Email: hdfcsecretailresearch@hdfcsec.com.
"HDFC Securities Ltd. is a SEBI Registered Research Analyst having registration no. INH000002475."
Disclosure:
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material conflict of interest.
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compensation/benefits from the Subject Company or third party in connection with the Research Report.

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