1 Edelweiss Financial Services Ltd Analyst Details Jaymin Trivedi [email protected] 022- 62257275 Banking & Finance | 29 March 2017
1
Edelweiss Financial Services Ltd
Analyst Details
Jaymin Trivedi
022- 62257275
Banking & Finance | 29 March 2017
2
Led by Rashesh Shah, A veteran in Indian financial services industry, EFSL is emerging as a well-
diversified financial services conglomerate. EFSL has successfully transformed from a broking entity to
NBFC (~70% profit is from credit) which is growing at a healthy pace.
Shareholding (%)
Company Data
BSE Code 532922
NSE Code EDELWEISS
Equity Capital (` bn) 83.12
Face Value (`) 1
Market Cap (` bn) 121.6
Avg Daily Volume (Qtly) 1444162
52 week H/L (`) 149/54
Source: NSE, BSE, Capital Line
Source: BSE
Source: ABML Research, Bloomberg Source: ABML Research
Edelweiss Vs Sensex performance
In ` bn Revenues YoY (%) PAT YoY (%) EPS (`) ABV (`) RoA (%) RoE (%) P/E (x) P/B (x)
FY17 45.4 23.5% 5.8 39.4% 6.9 49.3 1.6% 14.6% 21.1 3.0
FY18E 56.6 24.6% 8.1 40.6% 9.7 55.4 1.8% 18.0% 15.0 2.6
FY19E 69.3 22.4% 10.9 33.9% 13.0 64.9 2.0% 20.8% 11.2 2.2
• Diversified credit book growing at a healthy pace: It has a well-diversified credit portfolio including
Structured collateralized credit (29%), Developer funding (25%), Retail mortgage (12%), Loan to ARC
company (14%), SME & others (9%), LAS (7%), Agri & rural finance (4%). EFSL mainly lends to 2nd
& 3rd tier companies wherein it is able earn high yields while taking measured risk.
• ARC business is now largest in India with ~50% market share: EFSL is amongst the handful
companies that has significant focus and stake in ARC business. Strong underwriting and efficient
management can lead to disproportionate returns, thereby boosting profitability in medium term.
• Strong underwriting skills enables the company to maintain stable asset quality: Before
extending credit, EFSL follows its own set of protocols which includes i) understanding the
counterparty i.e. borrower and its background completely ii) having 2-2.5x collateral which provides
cushion in case the loan goes bad iii) analyzing Cash flows of borrower iv) Water tight loan contracts
for quick enforcement of agreement. These measures shall enable it to maintain asset quality.
• Valuations: EFSL is expected to deliver steady profit growth over next few years given favorable
Industry dynamics and company specific levers. Profitability from Non-credit business is set to
improve as operating leverage kicks in. Insurance business to break-even in FY21 as current losses
narrow down over next 4 years. We value the company at 3.1x FY19E ABV and PE of 15.3x which is
reasonable for a company expected to grow its profits at 37.2% CAGR over FY17-19E
Key Investment Arguments:
Financial Snapshot:
Promoters36.98
FIIs29.56
GDR/ADR5.4
Others28.06
75
125
175
225
275
325
Feb
-16
Mar
-16
Apr
-16
May
-16
Jun-
16
Jul-1
6
Aug
-16
Sep
-16
Oct
-16
Nov
-16
Dec
-16
Jan-
17
Feb
-17
Rel
ativ
e Pe
rfor
man
ce
Edelweiss Fin. Return Sensex Return
Edelweiss Financial Services Ltd CMP: Rs146 Target: Rs200
3
Strong Management Pedigree
Incorporated in 1996 by Mr Rashesh Shah, Edelweiss has evolved over a period of time with its wide-ranging operations from Investment Banking to
NBFC. Management has made majority of investments in trough phase and the company was well-positioned to reap the benefits in bull phase. This
gives us the confidence in the management’s ability to take favorable risk-reward bets going ahead which shall percolate in healthy profit growth.
1996 - 2000 2005 - 2008 2008 - 2013
Investment Banking
Institutional Equities &
Treasury
HNI Broking
Corporate loans &
Asset Management
Precious Metals &
Debt Capital markets
Retail Capital markets
Housing Finance &
Agri Commodities
Life Insurance
SME Finance & Small
ticket Housing loans
Asset Reconstruction
• EFSL was well-placed to make most of the opportunities created in majority of the above metioned businesses during their bull phase. The ability of
Management to understand the risk matrix and adapt to ever-changing business dynamics provides comfort to us.
• Mr Rashesh Shah, the co-founder and chairman of Edelweiss has over 20 years of experience in financial services. He has served on the
Executive Committee of NSE & been appointed as Chairman, Maharashtra Council of FICCI.
• Total promoter shareholding is 37% as on Q3FY17.
4
Diversified Business Model
In FY08, Edelweiss was mainly a broking company with ~15% contribution from credit business. Post 2009 crisis, Management has been able to
successfully grab the opportunity in lending business which supported overall profit growth. Credit business now constitutes ~71% of the consolidated
profit. Non-credit business constitutes ~41% of consolidated profit as Insurance business is a loss making unit.
Wealth
Management
- AUM (` 537
bn)
Wholesale
credit (AUM
of ` 136 bn)
Retail credit
(AUM of `
78.2 bn)
Credit book -
(` 214bn)
excluding
loan to ARC
of ` 35 bn
Broking –
ADV of (` 67
bn),
Asset
Management
- AUM (` 172
bn)
Insurance
Premium
(APE of ` 82
cr for
9MFY17).
Asset
Reconstructi
on - AUM (`
316 bn)
Edelweiss
Profit (` cr) FY13 FY14 FY15 FY16 FY17E FY18E FY19E
Credit Business 127.3 169.5 230.0 337.0 448.1 591.7 765.9
Growth (%) 62.5% 33.2% 35.7% 46.5% 33.0% 32.1% 29.4%
Non-Credit business 99.3 103.0 152.0 182.0 229.8 330.3 408.0
Growth (%) 57.8% 3.8% 47.5% 19.7% 26.3% 43.7% 23.5%
Adj profit Ex-Insurance 226.6 272.6 381.0 519.0 677.9 922.0 1173.9
Growth (%) 60.4% 20.3% 39.8% 36.2% 30.6% 36.0% 27.3%
Insurance -48.1 -51.1 -52.0 -104.0 -100.7 -110.7 -87.8
Adj Profit 178.5 221.5 329.0 414.0 577.2 811.4 1086.1
Growth (%) 39.1% 24.1% 48.5% 25.8% 39.4% 40.6% 33.9%
Source: ABML Research
5
A) Credit Business
India amongst the most under-penetrated credit market Shadow Banking to GDP ratio also amongst the lowest
Shift from Physical savings to Financial savings shall increase pace
Source: Global Shadow Banking Monitoring Report 2015, ABML Research Source: Global Shadow Banking Monitoring Report 2015, ABML Research
Source: RBI, ABML Research
601
122
271
205
109 108 95 9154
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
UK US China Korea Russia Turkey India Brazil Indonesia
(%)
Banks
147
82
26
48
4 619
33
10.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
160.0
UK US China Korea Russia Turkey India BrazilIndonesia
(%)
Shadow Banking
• India is amongst the most under-penetrated credit market which
leaves enough room for sustainable credit book growth at industry
level and for EFSL
• Within Banks, PSU banks have 70% market share which are
consistently losing out to private banks & NBFCs.
• Once the capex cycle picks up, the banking industry shall start
delivering healthy credit growth mainly led by private banks &
NBFCs. Edelweiss will be one of the major beneficiaries with all the
system, processes and technology in place.
• Financial savings to significantly pick-up post Demonetisation. We
expect Government to continue with reform measures that shall
increase the pace in shift from physical savings to financial savings,
thereby enhancing liquidity for the BFSI space.
29939
33648
37250
41167
9,3
35
10,6
40
11,6
94
12,5
03
13376
14637
14608
13794
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
FY12 FY13 FY14 FY15
(Rs b
n)
Gross Savings Gross Financial saving Saving in physical assets
6
Diversified credit book
65728953
15036
2001422896
28620
35489
37% 36%
68%
33%
14%
25% 24%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
0
5000
10000
15000
20000
25000
30000
35000
40000
FY13 FY14 FY15 FY16 FY17E FY18E FY19E
(Rs c
r)
Credit book Growth (%)
Source: ABML Research, Company Presentation Source: ABML Research, Company Presentation
Diversified credit book which is expected to grow at a healthy pace of 24.5% CAGR over FY17-19E
A) UNDERSTANDING THE COUNTER-PARTY I.E. BORROWER AND ITS BACKGROUND COMPLETELY
B) HAVING 2-2.5X COLLATERAL WHICH PROVIDES ADEQUATE CUSHION
C) ANALYSING CASHFLOWS OF BORROWER
D) WATER TIGHT LOAN CONTRACTS ENABLING SWIFT ENFORCEMENT OF AGREEMENT
Edelweiss mainly lends to tier 2 & tier 3 companies wherein it finds better risk-reward ratio. The philosophy of company (as discussed
below) in terms of strong underwriting skills provides comfort in terms of asset quality
Structured collateralised
credit7260
Wholesale mortgage
6346
Retail mortgage
2997
Loan against shares
1725
SME & Others2138
Agri & Rural f inance
963
Diversified Credit book (Rs cr)
7
Focus shifting to Retail credit book
Particulars (` cr) FY15 FY16 FY17E Proportion
(%) YoY (%) FY18E FY19E
CAGR over
FY17-19E
Wholesale book 11728 12097 14821 64.7% 22.5% 17848 21149 19.5%
Structured collateralised credit 6014 6750 7762.5 33.9% 15.0% 8927 10177 14.5%
Wholesale mortgage 5714 5347 7058 30.8% 32.0% 8921 10972 24.7%
Retail book 2105 6021 8076 35.3% 34.1% 10773 14340 33.3%
Retail mortgage 752 2641 3222 14.1% 22.0% 4028 5034 25.0%
Agri & Rural financing 301 590 944 4.1% 60.0% 1416 2062 47.8%
Loan against shares 451 1940 1785 7.8% -8.0% 2142 2463 17.5%
SME & others 601 850 2125 9.3% 150.0% 3188 4781 50.0%
Total credit book (Ex loan to ARC) 13833 18118 22896 100.0% 26.4% 28620 35489 24.5%
Distress asset book* 1226 1896 3700 - 95.1% 6750 9800 62.7%
Total credit book 15059 20014 26596 100.0% 14.4% 35370 45289 30.5%
P&L of credit business (` cr) FY16 FY17E FY18E FY19E
Int income 2839 3603 4447 5429
Int exp 1639 2011 2441 2962
NII 1200 1592 2006 2467
Operating cost 528 645 787 944
Provision 160 260 322 380
PBT 512 687 897 1143
Tax 174 239 305 377
PAT 338 448 592 766
PAT Growth (%) - 32.6 32.1 29.4
• Edelweiss retail book is growing at a much
faster pace (expect 33.3% CAGR over FY17-
19E) which shall provide stability to earnings
growth.
• EFSL credit business is expected to deliver
profit CAGR of 30.7% to ` 7.7 bn over FY17-
19E.
• We are valuing the credit business using two-
stage Gordon growth model. We value the
business at ` 73 bn i.e. ` 87/share. Implied
P/ABV is 2.2x P/ABV on FY19E ABV and 9.5x
its FY19E EPS.
Source: ABML Research
Source: ABML Research, Company Presentation
8
Financial parameters improving
16.20% 16.00% 15.80% 15.50%
10.70% 10.50% 10.20% 9.90%
6.85% 7.07% 7.13% 7.04%
6%
8%
10%
12%
14%
16%
18%
FY16 FY17E FY18E FY19E
Avg. Interest yield Avg cost of Borrowing NIM
1.40%
1.55%1.65%
1.70%
0.47%0.55%
0.60%0.70%
0.0%
0.2%
0.4%
0.6%
0.8%
1.0%
1.2%
1.4%
1.6%
1.8%
FY16 FY17E FY18E FY19E
GNPA NNPA
337
448
592
766
26%
47%
33% 32%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
100
200
300
400
500
600
700
800
900
FY16 FY17E FY18E FY19E
(Rs c
r)
PAT PAT growth
2.0%
2.1%
2.2%
2.3%
17.0%18.3%
22.0%23.7%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
1.8%
1.9%
2.0%
2.1%
2.2%
2.3%
2.4%
FY16 FY17E FY18E FY19E
RoA RoE
NIM expected to be maintained as cost of borrowing comes down Asset quality to remain stable
Healthy PAT growth expected, mainly supported by business growth Return ratios to improve as operating leverage kicks in
Source: ABML Research, Company Presentation Source: ABML Research, Company Presentation
Source: ABML Research, Company Presentation Source: ABML Research, Company Presentation
9
B) ARC – A business with long gestation period
Loan book is
transferred to ARC
at a discounted
value which is
mostly at ~50%
discount. For e.g.
` 20bn loan is sold
to ARC at ` 10bn.
ARC gives upfront
payment of 15% in
the form of cash
and Security
receipts (SR) for
the balance 85%.
In the given e.g.,
ARC shall pay `
1.5 bn in cash and
provide S` of `
8.5bn.
ARC receives
commission fee of
~2% on
discounted BV.
Here, ARC shall
receive ` 0.2bn.
Now, the onus is
on ARC to
turnaround the
company. Various
measures including
sale of collateral,
efficiency
improvement, etc.
shall be considered
Amount recovered
from loan shall be
shared in ratio of
15:85. In case
where receipts are
higher than
discounted value, a
part of it (~20% or
so) is given as
bonus. For e.g., if
receipts are ` 14
bn, ` 0.8 bn will be
given as bonus to
ARC while ` 13.2
bn will be shared in
ratio of 15:85.
1
2
3
4
5
Start
Finish It shall take about 5-7 years for an
ARC to recover money.
Management guiding for an IRR
at 22% p.a.
10
Edelweiss now a largest Indian ARC
Edelweiss ARC currently contributes ~10% to consolidated profit of EFSL. In FY16, it made a profit of ` 45 crore, which is mainly in the form of
commission income. Management intends to increase the profit contribution of ARC business to almost 20% by FY20.
A large part of assets bought belong to companies which are EBITDA and cashflow positive, but do not have enough cash to service the debt.
Asset reconstruction is relatively a new business for Edelweiss ARC as majority of growth (Assets acquired) has been witnessed post FY14 as
shown in the chart above.
NPA’s in the banking system have soared to ` 6tn+ which provides huge opportunity for ARC companies. As asset quality woes further intensify
and resolution of current NPA’s is prolonged, there is a reasonable probability that banking system could offer higher business to ARC.
We value the ARC business using DCF methodology. Conservative IRR of 19% has been assumed (vs. management guidance of 22%) on the
amount invested by Edelweiss ARC in the bad asset. We value the business at ` 43.4 bn i.e. ` 52/share
CDPQ targeted investment of ` 50 bn to provide next leg of growth
CDPQ has targeted investment of ` 50 bn over four years in the Edelweiss ARC business. It will be acquiring a 20% equity stake in Edelweiss ARC.
The partnership aims to channel between ` 120-140 bn (including CDPQ’s ` 50 bn).
Robust AUM growth propels Edel to be largest Indian ARC by AUM
Source: ABML Research, Company Presentation
Low acquisition cost in context of BV provides comfort
Source: Financial Stability Report 2015 ABML Research
90110
70100
500 500
20 305
30
200 210
0
100
200
300
400
500
600
FY10 FY11 FY12 FY13 FY14 FY15
(Rs b
n)
Book value of asset acquired Acquisition cost
32000
43200
56160
70200
8424060%
35%
30%25%
20%
0%
10%
20%
30%
40%
50%
60%
70%
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
FY15 FY16 FY17E FY18E FY19E
Rs. bn
ARC AUM Growth
11
C) Wealth management
• EFSL is amongst the largest wealth management company in India in terms of AUM size. Its AUM has grown at stupendous pace of 82% CAGR
over FY14-16.
• Edelweiss Wealth offers financial planning for family offices, Real Estate offering, Estate planning and offshore advisory, enabling stronger
penetration into this market. It offers services across all client segments and across multiple product lines with focus on suitability, portfolio and
operational risk management.
• Yield of 80-90 bps on Assets under advice is commendable which shall support profitability in medium term.
• EFSL is in investment stage with cost to income ratio ranging around 90% currently. It has been investing heavily in technology and manpower.
This is keeping profitability under pressure. Cost to income ratio is all-set to decline to ~78% by FY19E which shall support profitability.
• We are valuing the wealth management business at 2.2% of its FY19E AUM (3.2% of FY17E AUM) to arrive at a business value of ` 17.6 bn i.e. `
20/share. On P/E basis, we are valuing it at 20xFY19E EPS. It shall contribute ~10.6% to our target price.
• Last year, General Atlantic Singapore agreed to buy 21.6% stake in IIFL wealth management business for ` 11.2 bn valuing the firm at 6.5% of
AUM and PE of 25x on TTM basis. IIFL makes ~95 bps yield on topline and ~24 bps from PAT perspective.
177.5
295
550
660
79299%
66%
86%
20%20%
0%
20%
40%
60%
80%
100%
120%
0
100
200
300
400
500
600
700
800
900
FY15 FY16 FY17E FY18E FY19E
Rs. bn
AUM
AUM Growth
Particulars (` cr) FY16 FY17E FY18E FY19E
AUM 29500 55000 66000 79200
Growth 66.2% 86.4% 20.0% 20.0%
Commission & Fee
income 201 359 514 617
Growth 68.3% 52.1% 20.0%
Operating exp 197 325 422 485
Operating Profit 4 34 92 132
Source: ABML Research, Company Presentation Source: ABML Research, Company Presentation
Wealth Management AUM has grown at a robust pace
12
D) Asset management
• EFSL has acquired schemes of JP Morgan and Ambit alpha
schemes which has led to bump up in AUM of FY17E. The
company has onboarded 30 employees from JPM
• EFSL has recently made first closure of two funds. i) Edelweiss
Real Estate Fund with AUM of $ 380 mn and ii) Edelweiss India
Special Assets Fund II with AUM of $ 260 mn.
• Currently, contribution to profitability from Asset management
business is low. The company has strengthened the organisation
structure and hired senior resources for fund management. We
expect operating leverage shall lead to meaningful profit
contribution in medium term.
• We value the business at 4% of AUM to arrive at a value of ` 10
bn i.e. ` 12/share.
5.97
8.3
10.8
12.3
19% 19%
30%
14%
0%
5%
10%
15%
20%
25%
30%
35%
0
2
4
6
8
10
12
14
FY12 FY13 FY14 FY15 FY16
Rs. Tn
Mutual Fund Industry AUM
Mutual Fund AUM Growth
2 8 16
65
27 1934
107
29 27
50
172
0
20
40
60
80
100
120
140
160
180
200
FY14 FY15 FY16 9MFY17
Rs. bn
Mutual Fund AUM Alternative Assets AUM
Acquisition leads to bump-up in AUM during FY17E Indian MF industry AUM growing at a healthy pace
Fund closures leading growth in AUM
Source: ABML Research, Company Presentation Source: ABML Research, Company Presentation
Source: ABML Research, Company Presentation
29 2750
180
216
259.2
-7%
85%
260%
20% 20%
-50%
0%
50%
100%
150%
200%
250%
300%
0
50
100
150
200
250
300
FY14 FY15 FY16 FY17E FY18E FY19E
Rs. bn
AUM
ARC AUM Growth
13
E) Broking & Balance sheet Management Unit
Broking
• Edelweiss is one of the largest domestic institutional broking
company. It has made significant investment in technology in new
business lines. It has good mix of retail & institutional clients.
• Edelweiss has been ranked 1st in IPO in Retail and HNI
category. It has maintained leadership position in public issue of
bonds.
• Broking business contributes ~13% to PBT. We expect steady
all-round performance to continue.
Balance Sheet Management unit (BMU)
• EFSL maintains good liquidity with large G-sec book of ` 33.2 bn.
Balance sheet management assets constitute 15.5% of total
assets as on 9MFY17. BMU contributes ~8% to PBT.
Average Daily Volume consistently rising Generates healthy revenue from IB & Advisory business
Balance sheet management unit provides liquidity cushion
Source: ABML Research, Company Presentation Source: ABML Research, Company Presentation
Source: ABML Research, Company Presentation
3100
50005200
6700
0
1000
2000
3000
4000
5000
6000
7000
8000
FY14 FY15 FY16 9MFY17
Rs. cr
Average Daily Volume
61
114
100
72
0
20
40
60
80
100
120
FY14 FY15 FY16 9MFY17
Rs. cr
Investment Banking & Advisory
3317
2453
1213
346
0
500
1000
1500
2000
2500
3000
3500
Govt securities Liquidity cushion Fixed & Taxassets
Others
Rs. cr
Balance Sheet Management Unit
14
F) Life Insurance business
EFSL launched Edelweiss Tokio Life Insurance company in 2011 in partnership with Tokio Marine of Japan. Edelweiss is amongst the fastest growing
life insurance company albeit on a low base. It is now a loss making unit (~` 1 bn in a year for Edelweiss 51% stake). Management has guided that
insurance business shall break-even by 2021 as it has a long gestation period. We value Insurance business at 1.2x its FY19E networth to arrive at a
business value of ` 7 bn i.e. ` 8.4/share.
Particulars FY15 FY16 FY17E FY18E FY19E
Gross Premium Income 193 310 480.5 720.75 1009.05
Investment & Other income 97 87 150 180 216
Total Income 290 397 630.5 900.75 1225.05
Total Expenses 361 552 828 1117.8 1397.25
PAT -71 -155 -197.5 -217.05 -172.2
Edelweiss share in PAT -53 -104 -100.7 -110.7 -87.8
Networth 569 939 780 669 581
32%
7%
0.20%0%
5%
10%
15%
20%
25%
30%
35%
Edelweiss Tokio LifeInsurance
Peer set Industry
106187
300
465
697.5
976.576%
60%55%
50%40%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
0
200
400
600
800
1000
1200
FY14 FY15 FY16 FY17E FY18E FY19E
Rs.
cr
Insurance Premium
Insurance Premium Growth
56%
61%
71% 70%
50%
55%
60%
65%
70%
75%
FY14 FY15 FY16 9MFY17
Persistency (Individual & Group Combined)
Average Daily Volume consistently rising Generates healthy revenue from IB & Advisory business
Generates healthy revenue from IB & Advisory business
Source: ABML Research, Company Presentation
15
Valuation
EFSL has a well-diversified business model across various business lines. Going ahead, we expect operating leverage for majority of businesses to
improve which shall enable the company to deliver steady earnings growth trajectory. On consolidated basis, EFSL is trading at PE of 11.2x on its
FY19E EPS and P/ABV of 2.2x on its FY19E ABV. We value the company on SOTP basis to arrive at a target price of ` 200. At our target price, the
stock will trade at PE of 15.3x on its FY19E EPS and P/ABV of 3.1x on consolidated basis. The company is expected to deliver consolidated profit
CAGR of 37.2% over FY17-FY19E. We believe valuations are reasonable for the company expected to grow at such a healthy pace.
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Close -Unit Curr 1.0 X 1.5 X 2.0 X 2.5 X 3.0 X
Particulars Valuation basis Multiple on FY19 fig Business Value (` cr) Business value /share
Credit P/ABV 2.2x 7272 87.4
ARC DCF - 4341 52.2
Broking PE 12x 1024 12.3
Wealth management PE 20x 1764 21.2
AMC % of AUM 4.0% 1037 12.5
Insurance Networth 1.2x 698 8.4
BMU & others PE 8x 496 6.0
Total EFSL value 16631 200
CMP 146
Upside 37.0%
Historical 1 year forward PE band Historical 1 year forward P/ABV band
Source: ABML Research, Bloomberg Source: ABML Research, Bloomberg
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Consolidated Financials – EFSL
Balance Sheet
Financial Year (`cr) FY16 FY17 FY18E FY19E
Sources of Funds
Equity Capital 81 83.2 84 84
Reserves 3593 4055 4704 5573
Networth 3675 4228 4788 5657
Other Liabilities 697 836 1004 1204
Borrowings 27773 34439 42704 52953
Total Liabilities 32145 39503 48496 59814
Application of Funds
Loan book 20014 22896 28620 35489
FDs and Cash & Bank Balance 3116 3583 4372 5334
Govt Bonds 4866 5596 6827 8329
Other assets 4149 7428 8677 10663
Total Assets 32145 39503 48496 59814
Source: ABML Research
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Consolidated Financials – EFSL
Income Statement
Financial Year (` cr) FY16 FY17E FY18E FY19E
Interest income on credit business 2839 3603 4447 5429
Interest exp on credit business 1639 2011 2441 2962
NII 1200 1592 2006 2467
Non-interest income 2477 2950 3654 4460
Net total income 3677 4542 5659 6927
Emp Exp 882 1076 1313 1549
Other operating exp 2176 2648 3185 3813
Total exp 3058 3724 4498 5362
PBT 619 818 1162 1564
Tax 236 278 395 532
PAT 383 540 767 1032
Shares of Minority interest -31 -37 -45 -54
PAT after minority interest 414 577 811 1086
Growth 26% 39% 40.6% 33.9%
Source: ABML Research
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Consolidated Financials – EFSL
Ratios
Financial Year FY16 FY17 FY18E FY19E
Growth ratios
Credit growth 33.1% 14.4% 25.0% 24.0%
NII growth 49.3% 32.7% 26.0% 23.0%
PAT growth of credit business 46.9% 32.6% 32.1% 29.4%
Consolidated PAT growth 25.9% 39.4% 40.6% 33.9%
Other Key ratios
Cost to income ratio 83.2% 82.0% 79.5% 77.4%
RoA 1.4% 1.6% 1.8% 2.0%
RoE 12.9% 14.6% 18.0% 20.8%
Dividend payout ratios 25.1% 22% 20% 18%
Dividend per share 1.25 1.5 1.9 2.3
GNPA ratio 1.4% 1.6% 1.7% 1.7%
NNPA ratio 0.5% 0.6% 0.6% 0.7%
Valuation ratios (x)
EPS 5.0 6.9 9.7 13.1
P/E 29.4 21.1 15.0 11.2
BV 44.2 50.8 57.5 68.0
ABV 43.0 49.3 55.5 65.0
P/ABV 3.4 3.0 2.6 2.2
Source: ABML Research
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Research Team
Vivek Mahajan Hemant Thukral
Head of Research Head – Derivatives Desk
022-6225 7220 022-6225 7230
[email protected] [email protected]
Fundamental Team
Avinash Nahata Head Equity Analyst 022-6225 7208 [email protected]
Jaymin Trivedi Banking & Finance 022-6225 7275 [email protected]
Naveen Baid IT 022-6225 7274 [email protected]
Suresh Gardas Pharma & Chemicals 022-6225 7271 [email protected]
Mahavir Jain Equity Analyst 022-62257270 [email protected]
Quantitative Team
Sudeep Shah Sr.Technical Analyst 022-6225 7265 [email protected]
Ammolh Paatil Sr. Derivative Analyst 022-6225 7264 [email protected]
Rahil Vora Technical Analyst 022-6225 7266 [email protected]
Smita Dhale Sr.Executive –Derivative Desk 022-6225 7269 [email protected]
Advisory Team
Salim Hajiani Advisory Desk 022-6225 7277 [email protected]
Pradeep Parkar Equity Advisor 022-6225 7272 [email protected]
Mohan Jaiswal Sr. Exec.-Research Support 022-6225 7273 [email protected]
ABML research is also accessible in Bloomberg at ABMR
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