Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L&T Finance Holdings IPO
R o b u s t g r o w t h a n d h i g h m a r g i n s …
L&T Finance Holdings has a loan portfolio of | 17411 crore, which grew at
a robust 57% CAGR over FY09-11. L&T Finance and L&T Infrastructure
Finance are the main growth drivers of the holding company contributing
99% to total revenues and 97% of total loan book. We believe the growth
will remain strong considering lower base.
ƒ Strong promoter group and brand equity
L&T Finance Holdings Ltd is 95.9% owned by L&T, one of India’s largest
corporate houses having | 40 billion of profits annually. L&T does not
have any identifiable promoters and is a widely held and professionally
managed company. We believe the brand will remain a strong positive for
the company in future.
ƒ Lower NPAs in spite of riskier asset classes provide comfort…
GNPA in L&T infra financing is just 0.7% and NNPA at 0.5%. Even for L& T
Finance, the GNPA stands at 1.4% and GNPA at 0.8% provides comfort
that NPA provisions are not substantial.
ƒ Healthy margins and return ratios for L&T Finance and L&T Infra….
L&T Finance enjoys average NIM of 7.9%, which is quite high in the
current scenario whereas L&T Infra has a slightly low yielding portfolio
leading to average NIMs being lower at 5%. Return on assets (RoA) and
equity (RoE) for both companies are in the range of 2.5-3.5% and 16-18%
respectively. We believe these strong return ratios offer enough to
achieve reasonable profits in future.
V a l u a t i o n
L&T Finance Holdings’ current NW stands at | 2890 crore on pre-issue
basis and | 4345 crore on post issue basis. This translates to a book value
of | 20 on pre issue and | 26 on post issue basis. At the issue price of |
59, the company will trade at 2.2x current BV. As NPAs are not material
we are not adjusting the BV accordingly. L&T Finance has close to 5%
stake, both in City Union Bank and Federal Bank providing further boost
to valuations not factored by us. Even M&M Finance and Shriram
Transport Finance with similar business segments are also trading at 2.5x
to 3x FY11 BV. Hence, we recommend SUBSCRIBE to the issue.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
L&T Finance Holdings IPO
R o b u s t g r o w t h a n d h i g h m a r g i n s …
L&T Finance Holdings has a loan portfolio of | 17411 crore, which grew at
a robust 57% CAGR over FY09-11. L&T Finance and L&T Infrastructure
Finance are the main growth drivers of the holding company contributing
99% to total revenues and 97% of total loan book. We believe the growth
will remain strong considering lower base.
ƒ Strong promoter group and brand equity
L&T Finance Holdings Ltd is 95.9% owned by L&T, one of India’s largest
corporate houses having | 40 billion of profits annually. L&T does not
have any identifiable promoters and is a widely held and professionally
managed company. We believe the brand will remain a strong positive for
the company in future.
ƒ Lower NPAs in spite of riskier asset classes provide comfort…
GNPA in L&T infra financing is just 0.7% and NNPA at 0.5%. Even for L& T
Finance, the GNPA stands at 1.4% and GNPA at 0.8% provides comfort
that NPA provisions are not substantial.
ƒ Healthy margins and return ratios for L&T Finance and L&T Infra….
L&T Finance enjoys average NIM of 7.9%, which is quite high in the
current scenario whereas L&T Infra has a slightly low yielding portfolio
leading to average NIMs being lower at 5%. Return on assets (RoA) and
equity (RoE) for both companies are in the range of 2.5-3.5% and 16-18%
respectively. We believe these strong return ratios offer enough to
achieve reasonable profits in future.
V a l u a t i o n
L&T Finance Holdings’ current NW stands at | 2890 crore on pre-issue
basis and | 4345 crore on post issue basis. This translates to a book value
of | 20 on pre issue and | 26 on post issue basis. At the issue price of |
59, the company will trade at 2.2x current BV. As NPAs are not material
we are not adjusting the BV accordingly. L&T Finance has close to 5%
stake, both in City Union Bank and Federal Bank providing further boost
to valuations not factored by us. Even M&M Finance and Shriram
Transport Finance with similar business segments are also trading at 2.5x
to 3x FY11 BV. Hence, we recommend SUBSCRIBE to the issue.
No comments:
Post a Comment