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L o w e r g r o w t h , f o c u s o n p r o f i t s . . .
Consolidated PAT of | 314 crore was higher than estimated | 304 crore
mainly due to better NII performance with spreads being maintained at
2.2%. Non interest income remained subdued at | 122 crore. Even
though Q1FY12 saw 30% loan book growth, sequential growth was flat
and the management has guided for 15% growth for FY12. We have
revised loan growth from ~25% CAGR to 19% CAGR over FY11-13E.
However, profit is expected to grow at 20% CAGR against estimated 27%
CAGR over the same period. Focus on profits from other business
segments (AUM based) will keep overall PAT growth healthy.
ƒ Incremental disbursements to slowdown...
Gross approvals and disbursements decreased 50% YoY in
Q1FY12. As per revised estimates, the loan book will grow at 15.4%
in Q1FY12E to | 43464 crore and 23.3% in FY13E to | 53603 crore.
NII growth was strong in Q1FY12 at 43% YoY and 2% QoQ due to
30% YoY credit growth and flat QoQ with change in mix
sequentially in favour of loan against shares. Even the treasury book
grew 14% YoY and 40% QoQ boosting treasury NII growth at 63%
YoY to | 55 crore. However, with lowered growth and rising cost of
funds, we expect NII to grow at 19% CAGR over FY11-13E in line
with credit. Spreads will sustain around 2.2% on a one year rolling
basis on account of selective lending.
ƒ Asset quality - still no signs of pain….
Provisions were slightly higher than estimate at | 40 crore but NPA
and NNPA still remain stable at 0.21% and 0.10%, respectively. We
believe a slight increase in NPA can be possible but manageable at
less than 1%.
ƒ Return ratios to stay muted….
With moderation in loan growth at 19% CAGR and lower leverage,
we expect return on equity to stay around 13-14% only.
V a l u a t i o n
We have lowered our P/ABV multiples to 1.4x for FY13E from1.5x. Hence,
we value IDFC’s lending business at | 132 and on SOTP basis we have
reduced our target price to | 167 from | 176 (includes AUM valuation,
NSE stake). We maintain our BUY recommendation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L o w e r g r o w t h , f o c u s o n p r o f i t s . . .
Consolidated PAT of | 314 crore was higher than estimated | 304 crore
mainly due to better NII performance with spreads being maintained at
2.2%. Non interest income remained subdued at | 122 crore. Even
though Q1FY12 saw 30% loan book growth, sequential growth was flat
and the management has guided for 15% growth for FY12. We have
revised loan growth from ~25% CAGR to 19% CAGR over FY11-13E.
However, profit is expected to grow at 20% CAGR against estimated 27%
CAGR over the same period. Focus on profits from other business
segments (AUM based) will keep overall PAT growth healthy.
ƒ Incremental disbursements to slowdown...
Gross approvals and disbursements decreased 50% YoY in
Q1FY12. As per revised estimates, the loan book will grow at 15.4%
in Q1FY12E to | 43464 crore and 23.3% in FY13E to | 53603 crore.
NII growth was strong in Q1FY12 at 43% YoY and 2% QoQ due to
30% YoY credit growth and flat QoQ with change in mix
sequentially in favour of loan against shares. Even the treasury book
grew 14% YoY and 40% QoQ boosting treasury NII growth at 63%
YoY to | 55 crore. However, with lowered growth and rising cost of
funds, we expect NII to grow at 19% CAGR over FY11-13E in line
with credit. Spreads will sustain around 2.2% on a one year rolling
basis on account of selective lending.
ƒ Asset quality - still no signs of pain….
Provisions were slightly higher than estimate at | 40 crore but NPA
and NNPA still remain stable at 0.21% and 0.10%, respectively. We
believe a slight increase in NPA can be possible but manageable at
less than 1%.
ƒ Return ratios to stay muted….
With moderation in loan growth at 19% CAGR and lower leverage,
we expect return on equity to stay around 13-14% only.
V a l u a t i o n
We have lowered our P/ABV multiples to 1.4x for FY13E from1.5x. Hence,
we value IDFC’s lending business at | 132 and on SOTP basis we have
reduced our target price to | 167 from | 176 (includes AUM valuation,
NSE stake). We maintain our BUY recommendation.
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