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Manappuram
1Q earnings beat; Maintain Buy
„Cut PO to Rs75, but net profit growth still at +50% in FY12
We have cut our earnings estimates by +4/3% for FY12/13 and PO to Rs75
factoring in margin pressure as well as slightly higher credit costs in challenging
macro environment. However, we still est. profit growth at +55/35% over FY12/13
driven by AUM growth (+50% CAGR over FY11-13) and operating leverage
(+65% of branches added in last 2 years). Hence, we believe the stock, trading at
+2.2-2.3x FY12E book (1.8x FY13E book), may trade at similar multiples one-year
out (FY13) given RoAs of +4.0-4.5% and RoEs improving from ~21% (FY12E) to
~24% in FY13E. Hence, maintain Buy, with +27-28% upside potential.
1Q: Earnings up 134% yoy driven by strong AUM growth
MGFL reported earnings of Rs1.1bn, a 134% yoy growth and ~7% higher than
est. 1Q growth driven by AUM growth of +165% yoy (~20% qoq). Disbursements
growth also strong at 120% yoy (Rs69bn) in 1QFY12. Spreads are down to ~14%
(~50bps qoq) on rising funding costs. Operating leverage also coming to play,
with cost-inc. ratio down to ~45% (vs. ~50% yoy / qoq), despite more than
doubling of branches and staff yoy. Although, NPLs increased to ~30bps from
10bps in 4Q, but is more seasonal / technical.
Buy for high RoAs and rising RoEs
We maintain our Buy on MGFL, as growth (AUM growth est. at +50% CAGR
through FY11-13) likely to remain strong given rapid branch expansion. RoAs also
to remain high (+4.0-4.5%) and RoEs to improve (~21% in FY12 to ~24% in
FY13), as an improvement in operational efficiency would largely mitigate adverse
impact of margin compression ahead (est. +340bps compression over FY11-13).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Manappuram
1Q earnings beat; Maintain Buy
„Cut PO to Rs75, but net profit growth still at +50% in FY12
We have cut our earnings estimates by +4/3% for FY12/13 and PO to Rs75
factoring in margin pressure as well as slightly higher credit costs in challenging
macro environment. However, we still est. profit growth at +55/35% over FY12/13
driven by AUM growth (+50% CAGR over FY11-13) and operating leverage
(+65% of branches added in last 2 years). Hence, we believe the stock, trading at
+2.2-2.3x FY12E book (1.8x FY13E book), may trade at similar multiples one-year
out (FY13) given RoAs of +4.0-4.5% and RoEs improving from ~21% (FY12E) to
~24% in FY13E. Hence, maintain Buy, with +27-28% upside potential.
1Q: Earnings up 134% yoy driven by strong AUM growth
MGFL reported earnings of Rs1.1bn, a 134% yoy growth and ~7% higher than
est. 1Q growth driven by AUM growth of +165% yoy (~20% qoq). Disbursements
growth also strong at 120% yoy (Rs69bn) in 1QFY12. Spreads are down to ~14%
(~50bps qoq) on rising funding costs. Operating leverage also coming to play,
with cost-inc. ratio down to ~45% (vs. ~50% yoy / qoq), despite more than
doubling of branches and staff yoy. Although, NPLs increased to ~30bps from
10bps in 4Q, but is more seasonal / technical.
Buy for high RoAs and rising RoEs
We maintain our Buy on MGFL, as growth (AUM growth est. at +50% CAGR
through FY11-13) likely to remain strong given rapid branch expansion. RoAs also
to remain high (+4.0-4.5%) and RoEs to improve (~21% in FY12 to ~24% in
FY13), as an improvement in operational efficiency would largely mitigate adverse
impact of margin compression ahead (est. +340bps compression over FY11-13).
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