10 october 2020 2qfy21e results preview banks and nbfcs nbfcs - 2qfy21 results p… · however,...

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

[email protected]

+91-22-6171-7328

Aakash Dattani

[email protected]

+91-22-6171-7337

Punit Bahlani

[email protected]

+91-22-6171-7358

https://www.hdfcsec.com/hsl.docs/Banking%20-%20Update%20-%20Near-term%20NIM%20headwinds%20-%20HSIE-202008271010565762717.pdf

https://www.hdfcsec.com/hsl.docs/Banking%20-%20Update%20-%20Near-term%20NIM%20headwinds%20-%20HSIE-202008271010565762717.pdf

mailto:[email protected]

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: 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: 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


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.



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


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


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: NBFCs


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


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



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


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


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

Unit No. 1602, 16th Floor, Tower A, Peninsula Business Park,

Senapati Bapat Marg, Lower Parel, Mumbai - 400 013

Board: +91-22-6171-7330 www.hdfcsec.com

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