10 October 2020 2QFY21E Results Preview
Banks and NBFCs
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Sequential earnings recovery Despite an uptick in real economic activity and fresh disbursals, we
expect companies within our coverage to have registered slower YoY
credit growth. Disclosures by select lenders and trends in non-food
credit growth suggest this too. We expect banks/NBFCs with our
coverage to report credit growth of 7.3/5.8% YoY vs. 8.2/7.1% in 1QFY21.
Deposit growth is likely to have exceeded credit growth for our coverage
banks, and we expect large private banks within our coverage to have
fared particularly well on this front. Asset quality metrics are likely to
have remained stable across lenders (1) as delinquent accounts emerging
from the moratorium are unlikely to have crossed ninety days past due,
and (2) in light of the recent Supreme Court order preventing lenders
from classifying borrowers as NPAs (subject to the final verdict).
However, lenders are likely to continue to shore up provisions.
Our broad thesis remains unchanged. We expect the space to witness
increased polarisation. Consequently, larger banks with sufficient
capital, strong granular liability franchises, and a good asset quality
track record are expected to emerge stronger. Our top picks are ICICIBC
(SoTP of Rs 496), AXSB (SoTP of Rs 619), and CUBK (TP of Rs 196). CIFC
(TP of Rs 289) remains our top pick in the NBFC space.
What we will watch for: (1) disbursals under the NCGTC scheme, (2)
collection efficiency trends and early bucket delinquencies, (3) bank-
level commentary on the utilisation of the COVID-19 related stress
resolution framework, (4) additional provisions related to COVID-19,
and (5) judicial outcomes related to the classification of accounts as NPA
and the levy of interest on interest in case of accounts under moratorium.
Banks
In 2QFY21, we expect credit growth for our coverage banks to slow
further (7.3% YoY vs. 8.2% in 1Q). Even as disbursals of new loans are
likely to have seen a QoQ uptick, they are likely to have been much
lower YoY. Further, repayments are likely to have increased with the
moratorium coming to an end in August. Non-food credit growth
slowed to 6% YoY in August, the slowest rate of growth in the past
three years. Similar trends were seen across sub-segments- industrial
credit, service credit, and personal loans.
We expect our coverage banks to have registered relatively quicker
deposit growth in 2Q (14.7% YoY). Aggregate deposits for the sector
grew by ~12% YoY during the fortnight ended 11th September. Within
our coverage, we expect large private banks (ICICIBC, AXSB, and
KMB) and SBIN to have seen strong deposit growth during the
quarter. Consequently, we expect a broad-based downtrend in CD
ratios (73.5% vs. 74.5% in 1QFY21 and 78.5% in 2QFY20).
We expect most of our coverage banks to have seen stable to declining
NIMs on account of (1) the impact of the fall in MCLRs/ external rates
becoming more pronounced as a greater proportion of their loan books
is re-priced, (2) banks’ assets are likely to be re-priced faster than their
liabilities, and (3) a fall in banks’ CD ratios and rise in liquidity. We
expect compression to continue over FY21E (refer to our report ‘Near-
term NIM headwinds’).
BANKS
Company CMP
(Rs) RECO
TP
(Rs)
AUBANK 740 ADD 767
AXSB 468 BUY 619
BANDHAN 326 BUY 367
CUBK 151 BUY 196
DCBB 79 ADD 123
FB 53 BUY 78
ICICIBC 402 BUY 496
IIB 623 ADD 664
KMB 1,320 ADD 1,384
KVB 32 REDUCE 39
RBK 180 REDUCE 175
SBIN 198 BUY 316
UJJIVANS 32 ADD 40
NBFCs
Company CMP
(Rs) RECO
TP
(Rs)
BAF 3,318 ADD 3,643
CIFC 253 BUY 289
CREDAG 729 ADD 797
MMFS 133 BUY 170
SHTF 641 ADD 863
INDOSTAR 292 REDUCE 299
LICHF 306 REDUCE 319
REPCO 213 ADD 269
Source: HSIE Research
Darpin Shah
+91-22-6171-7328
Aakash Dattani
+91-22-6171-7337
Punit Bahlani
+91-22-6171-7358
Page | 2
2QFY21E Results Preview
Most banks within our coverage registered a sharp QoQ improvement in cost
metrics in 1Q, on account of lower business volumes. With an uptick in business
volumes (relative to 1Q), operating costs are likely to rebound sequentially.
However, most banks should register a YoY improvement in cost efficiency.
Similarly, with a fall in business volumes, most banks saw a sharp fall in core non-
interest income, the impact of which was offset by higher treasury income at some
banks in 1QFY21. We expect a sequential rise in core non-interest income (albeit
lower YoY). Treasury income is likely to be sequentially lower for our coverage.
Asset quality metrics will remain optically cushioned, as most accounts which have
turned delinquent on exiting the moratorium would not have crossed ninety days
past due. Further, the Supreme Court has ordered lenders not to classify accounts
as non-performing. However, this would be subject to judicial outcomes on the
matter, and banks could voluntarily classify accounts as non-performing.
We expect our coverage banks to see a sequential fall in non-tax provisions,
although they are likely to be higher on a YoY basis as banks may want to insulate
their balance sheets further. As GNPAs are unlikely to see a material increase,
calculated coverage is set to rise for most players.
We will watch for commentary around (1) collection trends, (2) early bucket
delinquencies (SMA), and (3) restructuring under the COVID-19 stress resolution
framework, and regulatory/ judicial developments regarding the levy of interest on
loans under moratorium and classification of delinquent accounts as NPA.
NBFCs and HFCs
NBFCs and HFCs within our coverage are expected to have registered a QoQ
uptick in disbursals in 2Q. However, we expect YoY AUM growth for these
companies to decelerate further, on account of an increase in repayments and lower
disbursals (YoY).
Asset quality (GS-III) for most players is likely to be optically stable, as most
accounts turning delinquent after the completion of the moratorium would not
have crossed ninety days past due and the Supreme Court order on the
classification of accounts as NPAs. However, this would be subject to judicial
outcomes on the matter, and NBFCs could voluntarily classify accounts as non-
performing.
We have factored in elevated provisions across our coverage (on a YoY basis).
Despite a fall in their cost of funds, we expect these companies to register stable to
declining NIMs on account of higher liquidity maintained by them. Operating
efficiency metrics are likely to deteriorate sequentially.
We will watch for commentary around (1) collection trends, (2) movement in Stage
I and II asset pools and (3) restructuring under the COVID-19 stress resolution
framework. Regulatory/ judicial developments regarding the levy of interest on
loans under moratorium and classification of delinquent accounts as NPA.
Page | 3
2QFY21E Results Preview
2QFY21E: financial summary
Rs bn
NII PPOP APAT
2Q
FY21E
YoY
(%)
QoQ
(%)
2Q
FY21E
YoY
(%)
QoQ
(%)
2Q
FY21E
YoY
(%)
QoQ
(%)
PSU banks
SBIN 269.5 9.6 1.2 155.2 (14.7) (14.1) 32.6 8.3 (22.1)
Private banks
AXSB 70.7 15.9 1.3 56.7 (4.7) (3.0) 17.7 NA 58.8
BANDHAN 18.6 21.9 2.9 15.8 20.5 (0.6) 7.1 (26.7) 29.5
CUBK 4.4 7.2 1.0 3.1 (11.7) (14.1) 1.1 (42.6) (27.8)
DCBB 3.1 (0.7) 1.5 1.8 (3.1) (6.5) 0.7 (21.1) (9.2)
FB 12.8 13.8 (1.4) 12.8 13.8 (1.4) 3.4 (18.3) (15.1)
ICICIBC 91.4 13.4 (1.5) 74.9 8.9 (30.5) 29.9 356.4 15.0
IIB 32.0 10.1 (3.2) 25.1 (3.4) (12.3) 5.0 (63.9) 8.3
KMB 37.7 12.6 1.3 27.7 10.5 5.6 13.7 (20.7) 10.0
KVB 5.8 (3.4) 2.5 4.1 (4.3) (12.9) 0.7 9.5 (34.3)
RBK 10.1 16.1 (3.2) 6.2 (3.0) (10.6) 0.9 57.4 (39.5)
Aggregate 286.7 13.5 (0.3) 228.1 3.9 (14.6) 80.1 47.3 17.0
SFBs
AUBANK 5.2 14.9 0.6 3.6 29.1 (14.3) 1.5 (10.8) (13.4)
UJJIVANS 4.6 19.2 0.9 2.1 48.3 (2.3) 0.6 (38.9) 3.6
Aggregate 9.8 16.9 0.8 5.7 35.6 (10.2) 2.1 (20.6) (9.4)
NBFCs
BAF 33.1 5.4 0.4 29.7 13.6 (0.7) 11.3 (25.3) 16.9
CIFC 9.9 14.6 5.3 6.6 6.1 3.0 4.2 35.9 (3.2)
CREDAG 3.9 51.1 0.2 2.4 56.4 (5.3) 0.8 (25.0) 1.4
MMFS 13.8 11.7 2.9 10.2 23.9 (2.8) 2.8 12.5 81.7
SHTF 18.5 (7.3) 0.8 14.9 (5.9) (0.1) 4.8 (36.6) 276.4
INDOSTAR 1.3 (21.0) (1.8) 0.7 (48.6) (2.6) 0.4 (21.3) (17.7)
Aggregate 47.4 4.9 2.2 34.8 4.8 (0.8) 13.0 (11.8) 55.2
HFCs
LICHF 12.6 0.7 3.3 11.4 0.3 6.3 7.7 0.0 (5.5)
REPCO 1.3 8.1 (0.0) 1.1 5.2 (0.6) 0.6 (35.4) 1.6
Aggregate 13.9 1.3 3.0 12.5 0.7 5.6 8.4 (4.1) (5.0)
Source: HSIE Research
Page | 4
2QFY21E Results Preview
2QFY21E: Banks What’s likely Key monitorables
AUBANK
As disbursals are likely to have been tepid, we expect AUM
growth to slow to considerably to 11.5% (+3.5% QoQ)
NII is expected to have grown at 15% YoY (+1% QoQ) with a
sequential dip in NIM.
We expect operating costs to have risen ~8% QoQ.
We expect a 32% YoY PPOP growth after building led by a
6% YoY (down 19% QoQ) rise in non-interest income.
We have built higher provisions (+2.5x YoY, -16% QoQ).
Adjusted PAT to dip 11/13% YoY/QoQ.
Comments on collection efficiency, growth and asset quality
Retail deposit traction.
Sale of stake in AAVAS.
Plans to raise equity capital
AXSB
~10% YoY (+2.5% QoQ) loan growth and a marginal
improvement in NIMs are expected to drive core earnings
growth of 16% YoY (+1.3% QoQ).
Drop in non-interest income (muted core fees and lower
treasury gains) will result in PPOP de-growth of ~5/3%
YoY/QoQ).
We have factored in a ~13% YoY rise in non-tax provisions,
even as AXSB has a calc. PCR of ~75% and additional
contingent provisions.
However, as provisions are expected to be much lower QoQ,
we expect a sharp QoQ rise in PAT (+59%).
GNPA and BB and below rated loan pool flux.
Deposit traction.
Comments on restructuring
Outlook on growth
Additional provisions
Subsidiaries’ performance
BANDHAN
The bank disclosed in its exchange filings that its AUM grew
20/3% YoY/QoQ, and its deposits grew 9% QoQ led by a 12%
rise in CASA deposits.
We expect lower CoF to drive NIM improvement and
consequently, NII is expected to grow 21.9/2.9% YoY/QoQ.
We continue to factor higher provisions (+4.25x YoY, down
27% QoQ) despite the sharp improvement in collection
efficiency and existing provisioning buffers.
Net earnings to dip 26.7% YoY (+29.5% QoQ)
Comments on growth, collections and on-ground business
activities.
Additional provisioning to further strengthen the B/S
PAR trends and approach to/ strategy around restructuring.
CUBK
6% YoY loan growth. Disbursals under the NCGTC scheme
and gold loan disbursals would have contributed to a
majority of incremental credit
As NIMs could dip sequentially, core earnings are expected
to grow at a mere 1% QoQ (+7% YoY).
Drop in non-interest income (lower fees and dip in treasury
gains) and a 4% QoQ rise in opex will drag PPOP (-11.7/-
14.1% YoY/QoQ).
After factoring in higher provisions (+45% YoY, flat QoQ),
net earnings are expected to dip 43/28%.
The utilisation of MSME restructuring
Disbursals under NCGTC scheme
Comments on overall stress (SMA II, GNPAs and restructuring)
Comments on the SME space.
DCBB
Loan growth is expected to moderate to ~3.3% YoY.
Relatively less risky segments such as home loans and gold
loans are likely to have contributed to a majority of
incremental credit.
We expect core earnings to remain flat YoY (+1.5% QoQ) as
we build QoQ NIM compression.
PPOP to de-grow 3.1/6.5% YoY/QoQ led by lower non-
interest income (down ~37/18%) even as operating expenses
could remain under check (+1.5% QoQ).
We have factored in elevated provisions (+89.5% YoY, down
2% QoQ).
Consequently, we expect PAT to de-grow 21/9% YoY/QoQ.
Retail deposit accretion.
The utilisation of MSME restructuring, if any
Disbursals under the NCGTC scheme
LAP/SME-specific commentary
Comments on growth and improvement in cost-efficiency
Page | 5
2QFY21E Results Preview
What’s likely Key monitorables
FB
FB’s loans grew 6.4/1.4% YoY/QoQ, and its deposits grew
12.3/1.2%, as per recent exchange filings.
Core earnings are expected to grow by 13.8% YoY (down
1.4% QoQ).
Non-interest income to see a sharp QoQ drop, led by lower
treasury gains.
We expect opex to grow 3.3% QoQ, as business volumes
increase.
Consequently, we expect PPOP to grow 7.8% YoY (dip 17%
QoQ.
Higher provisions (+26% YoY) will drag net earnings by
18.3% YoY.
Disbursals under the NCGTC scheme
The utilisation of MSME restructuring, if any
Incremental provisions towards COVID-19/ improvement of
PCR
Additions to the watch-list
Comments on growth and fundraise
ICICIBC
Loan growth to slow further to 5.7% YoY
Core earnings to grow at 13% YoY (down 1.3% QoQ, 1Q
included a one-off- interest on tax refund).
Non-interest income to dip sequentially, led by lower
treasury gains ( 1Q included a stake in sale subsidiaries).
We expect PPOP to grow 9% YoY (down 31% QoQ), led by
an improvement in cost metrics.
Despite ICICIBC’s high coverage ratios, we have
conservatively factored in higher provisions (+38.6% YoY,
albeit lower QoQ).
We expect 15% QoQ PAT growth (4.6x YoY, on a smaller
base).
Incremental COVID-19 related provisions
Comments on collection efficiency
Movement in BB and below-rated book and outlook on asset
quality (including restructuring)
Comments on growth
Subsidiaries’ performance
IIB
The bank disclosed that its loans grew 1.6/1.1% YoY/QoQ
and that its deposits grew 10.3/7.9%
Deposit growth was led by healthy CASA growth
We expect core earnings to grow at 10% YoY (down 3%
QoQ).
Non-interest income growth is expected to slow to
22.1/11.5% led by lower fees and treasury gains.
Even with a controlled opex growth, we expect PPOP to de-
grow 3.4/12.3% YoY/QoQ.
We have factored in higher provisions (Rs 18.4bn, +150%
YoY), as we expect the bank to shore up coverage and build
higher COVID-19 related provisions.
We expect earnings to dip 63.9% YoY (+8% QoQ).
Provisions towards COVID-19/ increase PCR
Additions to the watch-list and stress in the corporate and
SME segments.
Comments on collection efficiency in the microcredit segment
Comments on growth
KMB
We expect loans to grow 2% on a sequential basis.
We expect NIMs to dip, on account of asset side re-pricing
and a lower CD ratio. NIMs will be partially cushioned by
the recent drop in SA rates and the recent fundraise.
We expect NII growth of 12.6% YoY (+1% QoQ).
With controlled opex growth PPOP is expected to grow at
10.5/5.6% YoY/QoQ.
We have factored in higher provisions (+2.3x YoY, flat
QoQ).
Consequently, PAT to de-grow 20.7% YoY (+10% QoQ).
Comments on macros and the financial Sector
Comments on growth and overall stress
Additional provisions towards COVID-19/ increase in PCR
Performance of subsidiaries.
Page | 6
2QFY21E Results Preview
What’s Likely Key monitorables
KVB
Core earnings to de-grow YoY led by a sustained decline in
loan growth (-1% YoY).
NIMs are expected to remain flattish (YoY and QoQ)
Non-interest income to dip 11/22% YoY/QoQ, led by lower
treasury gains and muted fee traction.
Consequently, PPOP is expected to de-grow 4.3/12.9%
YoY/QoQ, even as opex growth is contained.
Net earnings to grow 9.5% YoY (-34% QoQ), on a small
base) after factoring elevated LLPs (~1.9% ann.).
Comments on the strategy of the MD&CEO
The utilisation of MSME restructuring, if any
Additions to the watch-list and comments on the SME
(commercial) portfolio
Comments on fundraise
Disbursals under NCGTC scheme
RBK
As disclosed by the bank, loans de-grew 3.1/0.8% YoY/QoQ
and deposits grew 2.7/4.5%.
Deposit growth was led by healthy CASA growth (8%
QoQ).
We expect NII to de-grow 3.2% QoQ (+16.1% YoY), led by
sequential NIM compression.
Non-interest income to de-grow 27.8/4.4% YoY/QoQ on
account of muted fee traction and lower treasury gains.
PPOP to de-grow 10.6% QoQ, with a 10% drop in total
income and a rise in opex (+4% QoQ).
We have factored in elevated provisions (flattish QoQ) on
account of low existing PCR (53%) and COVID-19 related
provisions.
We expect net earnings to grow ~57% YoY on a small base.
Retail deposit traction
Comments on collections in and provisions related to the
micro-credit and credit card portfolios.
Comments on growth
Comments on additional provisioning requirements.
Margin trajectory
Movement in GNPAs and additions to the watch-list, if any.
SBIN
We expect loan growth of 8% YoY (+1% QoQ) to drive NII
growth of 9.6/1.2%.
Non-interest income to fall sequentially, led by lower core
fees and treasury gains. Further, non-interest income in 1Q
included stake sale gains of Rs in SBI Life.
Opex to remain flattish YoY, and grow 2.7% QoQ.
PPOP to de-grow 14.7/14.1% led by lower non-interest
income; core PPOP to grow 5% YoY.
We have factored in elevated loan loss provisions (+6%
QoQ) despite SBIN’s high PCR (~86%).
PAT to grow 8% YoY (down 22% QoQ)
Comments on the strategy of the new chairman
Comments on incremental stress (SMA, restructuring and
slippages)
Additional provisions to increase in PCR / COVID-19 related
provisions.
Comments on growth and fundraise (if any)
UJJIVANS
We expect AUM growth at the bank to slow further to
13/1.25% YoY/QoQ, even as disbursals should see an uptick
We expect sequentially flattish NII QoQ (+19% YoY), on
account of NIM compression.
We expect operating expenditure to rise by 7.5% QoQ, on
account of a rise in business volumes.
Consequently, PPOP is likely to de-grow 2% QoQ.
We continue to factor in higher provisions (+5.4x YoY,
down 47% QoQ).
Net earnings to dip 38.9% YoY (+3.6% QoQ).
Outlook on provisioning requirements
Retail deposit traction
Comments on collections and on-ground business activity
Comments on growth and oplev
Page | 7
2QFY21E Results Preview
2QFY21E: NBFCs
What’s Likely Key monitorables
BAF
The company reported that its AUM growth slowed further
to 1.3% YoY.
Lower CoF is likely to result in some margin improvement.
Consequently, NII is expected to grow 5.4% YoY
We continue to factor in higher provisions (+146% YoY,
down 13% QoQ) despite the significant COVID-19
provision buffer created by the company (2.2% of AUMs).
Net earnings to dip YoY (grow 17% QoQ).
Additional COVID-19 related provisions created
The utilisation of restructuring schemes
Conversion into flexi loans
Comments/ outlook on collection efficiency, asset quality and
growth.
CIFC
Disbursals could see a sharp sequential rise (albeit lower
YoY). This could be broad-based (LCVs, 2 wheelers, and
PVs and disbursals under the NCGTC scheme and
disbursals under the NCGTC scheme). However, they are
likely to be significantly lower YoY.
Consequently, we expect AUM growth of 9.9/2.7%
YoY/QoQ.
The recent capital raise and reduction in CoF are likely to
facilitate margin improvement, despite higher on balance
sheet liquidity.
We build 14.6/5.3% YoY/QoQ NII growth.
After factoring in a 9% QoQ rise in operating expenditure,
we expect PPOP to grow at 3% QoQ (+6% YoY).
We have conservatively factored in a 72% QoQ rise in
provisions, and we thus expect PAT to de-grow 3% QoQ
(+35.9% YoY).
Commentary on collections and borrowers’ business activity.
Outlook on incremental provisioning
Outlook on growth
Disbursals under the NCGTC scheme
CREDAG
We expect loan growth of 48% to drive NII growth of 51.1%
YoY (but just 20bps QoQ).
A fall in CoF should be beneficial for margins; however, the
impact of this would be partly offset by higher liquidity.
We build a PPOP growth of 56.4% YoY (but a decline of
5.3% QoQ, as a result of a sequential rise in operating
expenditure on account of an increase in business volumes).
We have conservatively built in higher provisions, even as
the company has seen a significant improvement in
collection efficiency. Consequently, we expect PAT to come
in ~25% lower YoY (+1.4% QoQ).
YoY numbers are not comparable due to the acquisition of
MMFL.
Commentary on collection efficiency trends and interactions
with borrowers.
Outlook on growth.
Comments on the imminent merger with MMFL and
operational integration.
INDOSTAR
We expect negligible disbursals and ~1% QoQ AUM de-
growth (+8.9% YoY growth).
Slower AUM growth and higher balance sheet liquidity will
result in NIM compression. We expect NII to de-grow by
21% YoY.
We have factored marginally higher operating expenditure
(+2.6% QoQ).
PPOP to dip 49% YoY and 2.3% QoQ.
Provisions are expected to remain stable QoQ, as the
company.
We thus expect PAT to dip21.5% YoY and 17.4% QoQ
Comments on business traction (disbursals and growth)
Liquidity, availability of funds and cost of funds (incremental).
Outlook on asset quality and restructuring
Incremental provisions on corporate and VF portfolio
Page | 8
2QFY21E Results Preview
What’s Likely Key monitorables
MMFS
We expect a sequential uptick in disbursals and AUM
growth of 13.4/1.3% YoY/QoQ.
We have factored in NII growth of 11.7/2.9%.
Operating costs are likely to see a sequential rise on account
of improving business volumes.
Provisions are expected to dip YoY and QoQ, on the back of
elevated provisions in 4QFY20 and 1QFY21.
Consequently, we expect PAT to grow 12.5/81.7%
YoY/QoQ.
Comments on collection efficiency and on-ground business
activity
The utilisation of restructuring schemes
Outlook on growth
SHTF
SHTF is likely to see a sharp sequential recovery in
disbursals (albeit lower YoY). However, on account of an
improvement in repayment rates, AUM growth will be
restricted to 1.5% QoQ (+4.9% YoY).
NIMs are likely to compress due to higher liquidity levels
and relatively sticky CoF; NII to de-grow ~7.3% YoY (flat
QoQ).
With the rise in business activity, operating expenditure is
expected to rise on a sequential basis.
We continue to factor in elevated provisions (+27.8% YoY;
albeit lower QoQ), despite the significant buffer of COVID-
19 related provisions created.
We expect PAT to de-grow by ~36.7% YoY (+51% QoQ, on a
smaller base).
Comments on collection efficiency and on-ground business
activity
The utilisation of restructuring schemes.
Outlook on growth
Views on the implementation of the Vehicle Scrapping Policy
LICHF
We expect AUM growth of 5.5% YoY (+2% QoQ) and a
sequential uptick in disbursals.
A fall in CoF is likely to facilitate an improvement in NIMs.
We expect NII growth of 3% QoQ (flattish YoY).
We expect PPOP to grow 6.3% at QoQ after factoring in a
~4.9% rise in operating expenditure.
As provisions have been volatile, we have factored in an
88% QoQ rise. This poses a risk to our estimates on either
side.
PAT to de-grow 5.5% QoQ (flat YoY).
Asset quality trends
Repayment rates
Outlook on provisioning requirements and margins
REPCO
We expect AUM growth of 5.7% YoY (+1.4% QoQ). Growth
in REPCO’s core home loan portfolio is likely to be higher
than that in its LAP portfolio.
A sequential dip in NIMs is likely to culminate into
sequentially flattish NII (+~8% YoY).
A gradual rise in QoQ will keep PPOP growth flattish QoQ
(+5% YoY).
We have factored in higher provisions (down QoQ)). This
poses a risk to our estimates on either side.
PAT to de-grow at 35.6% YoY (flat QoQ).
Outlook on growth, NIMs and asset quality.
Repayment rates.
Asset quality in the retail book and resolutions in developer
loans.
Approach towards provisions
Page | 9
2QFY21E Results Preview
Peer Set Comparison
MCap
(Rs
bn)
CMP
(Rs) Rating TP
ABV (Rs) P/E (x) P/ABV (x) ROAE (%) ROAA (%)
FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E FY21E FY22E FY23E
BANKS
AUBANK# 225 740 ADD 767 148 175 204 32.9 27.9 21.0 4.91 4.15 3.56 14.5 14.8 17.0 1.41 1.47 1.63
AXSB# 1,433 468 BUY 619 302 352 401 15.4 10.9 9.1 1.49 1.27 1.17 9.5 11.4 12.8 0.94 1.21 1.35
BANDHAN 524 326 BUY 367 103 125 152 18.5 14.6 10.9 3.17 2.60 2.15 17.0 18.2 20.4 2.79 2.95 3.34
CUBK 111 151 BUY 196 65 77 88 21.1 14.7 12.4 2.31 1.97 1.71 9.5 12.3 13.0 1.04 1.39 1.48
DCBB 25 79 ADD 123 94 113 127 8.2 6.4 5.1 0.84 0.70 0.62 8.4 9.8 11.1 0.76 0.90 0.99
FB 106 53 BUY 78 64 75 84 8.8 6.7 5.6 0.82 0.70 0.63 8.0 9.7 10.7 0.64 0.76 0.83
ICICIBC 2,769 402 BUY 496 185 212 239 13.1 10.8 9.0 1.51 1.31 1.13 10.6 10.8 11.4 1.28 1.40 1.49
IIB 481 623 ADD 664 511 567 627 16.6 11.1 8.9 1.22 1.10 0.99 7.6 9.7 11.1 0.91 1.23 1.37
KMB# 2,611 1,320 ADD 1,384 287 328 369 33.6 28.8 23.1 3.72 3.16 2.71 11.8 11.1 12.0 1.66 1.70 1.83
KVB 26 32 REDUCE 39 51 63 68 8.0 5.6 4.1 0.64 0.52 0.47 4.8 6.7 9.0 0.46 0.61 0.78
RBK 108 180 REDUCE 175 193 209 224 21.4 13.0 9.7 0.93 0.86 0.81 4.3 6.4 8.0 0.54 0.81 0.96
SBIN# 1,769 198 BUY 316 170 210 243 6.8 3.4 2.6 0.48 0.38 0.33 4.6 8.3 10.1 0.27 0.48 0.59
UJJIVANS 56 32 ADD 40 17 19 22 25.5 18.2 10.7 1.90 1.65 1.43 7.0 9.1 13.7 1.07 1.23 1.72
NBFCS
BAF 1,990 3,318 ADD 3,643 571 698 841 46.3 28.7 22.3 5.81 4.75 3.95 12.5 17.4 18.8 2.55 3.68 3.93
CIFC 208 253 BUY 289 93 114 133 16.8 14.8 12.2 2.72 2.22 1.90 14.1 14.1 15.0 1.90 2.03 2.21
CREDAG 107 729 ADD 797 215 249 304 39.5 21.3 13.1 3.39 2.93 2.39 9.1 14.5 19.8 2.01 3.12 4.08
MMFS 164 133 BUY 170 85 103 125 18.6 10.6 8.3 1.37 1.12 0.92 5.8 8.6 10.1 1.00 1.63 1.87
SHTF 162 641 ADD 863 559 718 862 8.7 6.2 5.0 1.15 0.89 0.74 9.5 11.7 12.9 1.60 2.13 2.40
INDOSTAR 39 292 REDUCE 299 245 277 305 30.7 18.3 11.3 1.19 1.05 0.96 4.5 5.2 7.8 1.28 1.98 2.85
LICHF 155 306 REDUCE 319 292 315 361 7.4 6.4 5.3 1.05 0.97 0.85 11.0 11.5 12.6 0.94 1.02 1.13
REPCO 13 213 ADD 269 242 281 339 5.8 5.1 4.5 0.88 0.76 0.63 12.1 12.3 12.3 1.86 2.01 2.10
Source: HSIE Research, #Adjusted for subsidiaries
Page | 10
2QFY21E Results Preview
Rating Criteria
BUY: >+15% return potential
ADD: +5% to +15% return potential
REDUCE: -10% to +5% return potential
SELL: > 10% Downside return potential
HDFC securities
Institutional Equities
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