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A n o t h e r d u l l q u a r t e r , v a l u a t i o n s c h e a p …
Net profit has declined 54% YoY to | 34.8 crore mainly due to general
insurance losses and higher interest costs. AMC, commercial finance and
broking & distribution generated PBT of | 134 crore whereas general
insurance made a loss of | 30 crore. Also, losses on the financial
investment book due to higher interest costs have impacted PAT. Total
income increased 17% YoY and declined -4.2% QoQ to | 1492 crore. We
believe the rising operating profits in businesses are a positive trend but
consolidated bottomline not improving remains a concern. Valuations are
extremely attractive at current levels and we re-iterate our BUY rating.
ƒ Life insurance business slows down, Nippon deal key trigger…
Though life insurance has generated PBT of | 7.9 crore, growth went
for a toss with 59% YoY, 67% QoQ dip in annualised premium
equivalent (APE). Also, market share loss of 350 bps in the quarter
was substantial. Final approval of Nippon deal will become a key
trigger as it will provide cash flows to the tune of | 3000 crore and
may boost the life insurance segment valuation. We have reduced
growth targets in premium in FY12E to 4% from 14% earlier reducing
our valuation to | 315 to | 264/share.
ƒ Commercial finance book grew 42% YoY to | 13000 crore. However,
NII grew 1.8% YoY and dipped 3.45% sequentially. Total 98% book is
fully secured now. Margins declined to 4.3% due to higher interest
costs but are expected to stay around 5% for the year
• General insurance Q1FY12 loss came at |30 crore. It has been a
laggard in overall profitability and hence we have incorporated |100
crore loss for FY12 and adjusted consolidated PAT for the same.
• The asset management segment will improve yields as the focus on
retail business increases. Q1FY12 profit increased from | 75 crore to |
70 crore sequentially though AUM remained flattish at | 101300 crore
V a l u a t i o n
We believe capital gains from Nippon deal and consolidation of life
insurance subsidiary in financials, which has become profitable from this
quarter, will add substantially to profitability not built into our estimates.
We expect the operational performance to improve. Valuations are quite
attractive and due to lower growth in life insurance, we revise our SOTP
target price to | 577/share and re-iterate our BUY rating on the stock
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
A n o t h e r d u l l q u a r t e r , v a l u a t i o n s c h e a p …
Net profit has declined 54% YoY to | 34.8 crore mainly due to general
insurance losses and higher interest costs. AMC, commercial finance and
broking & distribution generated PBT of | 134 crore whereas general
insurance made a loss of | 30 crore. Also, losses on the financial
investment book due to higher interest costs have impacted PAT. Total
income increased 17% YoY and declined -4.2% QoQ to | 1492 crore. We
believe the rising operating profits in businesses are a positive trend but
consolidated bottomline not improving remains a concern. Valuations are
extremely attractive at current levels and we re-iterate our BUY rating.
ƒ Life insurance business slows down, Nippon deal key trigger…
Though life insurance has generated PBT of | 7.9 crore, growth went
for a toss with 59% YoY, 67% QoQ dip in annualised premium
equivalent (APE). Also, market share loss of 350 bps in the quarter
was substantial. Final approval of Nippon deal will become a key
trigger as it will provide cash flows to the tune of | 3000 crore and
may boost the life insurance segment valuation. We have reduced
growth targets in premium in FY12E to 4% from 14% earlier reducing
our valuation to | 315 to | 264/share.
ƒ Commercial finance book grew 42% YoY to | 13000 crore. However,
NII grew 1.8% YoY and dipped 3.45% sequentially. Total 98% book is
fully secured now. Margins declined to 4.3% due to higher interest
costs but are expected to stay around 5% for the year
• General insurance Q1FY12 loss came at |30 crore. It has been a
laggard in overall profitability and hence we have incorporated |100
crore loss for FY12 and adjusted consolidated PAT for the same.
• The asset management segment will improve yields as the focus on
retail business increases. Q1FY12 profit increased from | 75 crore to |
70 crore sequentially though AUM remained flattish at | 101300 crore
V a l u a t i o n
We believe capital gains from Nippon deal and consolidation of life
insurance subsidiary in financials, which has become profitable from this
quarter, will add substantially to profitability not built into our estimates.
We expect the operational performance to improve. Valuations are quite
attractive and due to lower growth in life insurance, we revise our SOTP
target price to | 577/share and re-iterate our BUY rating on the stock
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