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Results beat expection…..
MFL reported a robust growth in operating profit of 44% yoy and Net
profit of 71% yoy in FY11 which is better than expected backed by
better than expected growth in disbursement, Net interest income and
improved asset quality resulting lesser write offs. We expect company
to continue to grow at this pace.
Business growth continues…..
MFL has witnessed a strong growth in disbursement of 33% yoy in
FY11 and 41% yoy in FY10 with CAGR growth of 26% over FY05-11.
We expect MFL to continue to grow at 30% for FY12 with a CAGR of
29% in FY11-13E.
NIMs remain stable
NIMs for FY11 stood at 5% as compared to 5.1% in FY10. This is due
to increase in interest rates in last fiscal. We expect further rise in interest
rates in the current quarter and to stabilize in 2HFY11. NIMs to remain
at 5.1% for FY12E and 5.2% in FY13E.
Highest efficiency till date resulting in lower write offs
Collection efficiency has toughed historic high at 102% in FY11 as
compared to 100% in FY10 and 98% in FY11 and improvement in asset
quality with write offs at 0.24% for FY11 vs 0.46% in FY11.
Improved return profile
ROAA has improved to 2.3% in FY11 and ROAE to 26% as compared
to 1.8% and 22% in FY11. This is due to strong growth in bottom line of
71% yoy in FY11 and 70% in 4QFY11.
Adequately capitalized
Capital adequacy stood at 18.2% in FY11 which is above the norms of
RBI. We expect the company to raise capital in FY12 to support the
targeted growth.
Valuation and Outlook
After factoring an overall consistent performance in terms of
disbursements, collection efficiency, stable margins and asset quality,
we believe MFL to continue to grow at 30% yoy in FY12 with CAGR of
28% in FY11-13E. At CMP of Rs 71, the stock is trading at 1x its
FY12E book value of Rs 69 and 7.6x its FY12E diluted EPS of Rs 9.4,
we expect the stock to trade at 1.4x its FY12E BV. Hence we
recommend to BUY the stock with the target of Rs 97.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Results beat expection…..
MFL reported a robust growth in operating profit of 44% yoy and Net
profit of 71% yoy in FY11 which is better than expected backed by
better than expected growth in disbursement, Net interest income and
improved asset quality resulting lesser write offs. We expect company
to continue to grow at this pace.
Business growth continues…..
MFL has witnessed a strong growth in disbursement of 33% yoy in
FY11 and 41% yoy in FY10 with CAGR growth of 26% over FY05-11.
We expect MFL to continue to grow at 30% for FY12 with a CAGR of
29% in FY11-13E.
NIMs remain stable
NIMs for FY11 stood at 5% as compared to 5.1% in FY10. This is due
to increase in interest rates in last fiscal. We expect further rise in interest
rates in the current quarter and to stabilize in 2HFY11. NIMs to remain
at 5.1% for FY12E and 5.2% in FY13E.
Highest efficiency till date resulting in lower write offs
Collection efficiency has toughed historic high at 102% in FY11 as
compared to 100% in FY10 and 98% in FY11 and improvement in asset
quality with write offs at 0.24% for FY11 vs 0.46% in FY11.
Improved return profile
ROAA has improved to 2.3% in FY11 and ROAE to 26% as compared
to 1.8% and 22% in FY11. This is due to strong growth in bottom line of
71% yoy in FY11 and 70% in 4QFY11.
Adequately capitalized
Capital adequacy stood at 18.2% in FY11 which is above the norms of
RBI. We expect the company to raise capital in FY12 to support the
targeted growth.
Valuation and Outlook
After factoring an overall consistent performance in terms of
disbursements, collection efficiency, stable margins and asset quality,
we believe MFL to continue to grow at 30% yoy in FY12 with CAGR of
28% in FY11-13E. At CMP of Rs 71, the stock is trading at 1x its
FY12E book value of Rs 69 and 7.6x its FY12E diluted EPS of Rs 9.4,
we expect the stock to trade at 1.4x its FY12E BV. Hence we
recommend to BUY the stock with the target of Rs 97.
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