Q1FY2020 Result Update | Finance
Aug 09, 2019
Aditya Birla Capital
BUY
CMP
`89
Performance Highlights
Target Price
`118
Particulars (` cr)
Q1FY20
Q4FY19
% chg (qoq) Q1FY19
% chg (yoy)
Investment Period
12 Months
PBT
3962
4090
-3.1
3424
16
PAT
270
259
4.2
213
27
Source: Company, Angel Research
Stock Info
Aditya Birla Capital (ABCL), a financial services provider, has reported mixed set of
Sector
Finance
numbers for Q1FY2020. Given the NBFC business witnessing moderation in loan
Market Cap (` cr)
19,383
Beta
0.6
growth, the provision increased, HFC segment performed well, AMC AUM growth
52 Week High / Low
152/78
subdued and PAT/AUM improved 2bps yoy. In insurance business, persistency ratio
Avg. Daily Volume
1,20,387
improved across tenure. Further, health insurance continued to report loss; however
Face Value (`)
10
management expects it to breakeven in next 2-3 years.
BSE Sensex
37,751
The company’s operations are divided in 8 segments. Of these, major income
Nifty
11,164
generation comes NBFC, Asset Management, Life insurance and housing finance.
Reuters Code
ADTB BO
NBFC: The segment includes retail, SME and UHNI lending, constituting 50% of the
Bloomberg Code
ABCAP IN
loan mix; loan book increased by 13% yoy to `50,171cr in this segment. GNPA and
NPA (Ex-IL&FS) were maintained at 1.24% and 0.72% respectively. Shifting book
towards higher yielding asset and lower marginal cost of funds led to reporting
Shareholding Pattern (%)
highest NIM of 5.39%.
Promoters
72.7
Asset Management: Domestic AUM for Q1FY2020 increased moderately 2.3% and
MF / Banks / Indian Fls
8.3
equity mix in the AUM remained stable at 36%. On profitability front, it reported
FII / NRIs / OCBs
2.9
marginal improvement in PAT/AUM by 2bps yoy to 18bps for Q1FY2020.
Insurance: Individual First Year Premium (FYP) grew 30% yoy, significantly higher
Indian Public / Others
16.1
than industry (excl. LIC) growth at 15%. Consistent improvement in quality across
periods with 13th month persistency improved by 591bps yoy to 78.34%. Market
share (excl. LIC) increased 18bps yoy to 3.9%
Abs. (%)
3m 1yr 3yr
Health Insurance: Gross written premium came in at `143cr, about 2 times over the
Sensex
0.6
(1.5)
32.0
previous year with retail business contributing 64%, covering more than 3.7 million
lives. Key positive was a significant improvement in combined ratio at 146% vs.
ABCL
(5.4)
(41.1)
-
190% in the previous year.
Housing Finance: Loan book grew 29% yoy to `11,827cr, while Net Interest Margin
Price chart
was maintained at healthy
3.1%. Cost-to-income ratio improved to 47%, as
250
compared to 73% in previous year led by scale and operating efficiencies.
200
150
Outlook & Valuation: We believe broad based and integrated financial offerings will
100
enable ABCL to benefit from financialisation of savings. We expect ABCL’s PAT to
50
register CAGR of 42% over FY2019-21E, largely driven by lending segment and
0
AMC. We recommend a Buy on the stock with a target price of `118.
Key Financials
Y/E March (` cr)
FY19
FY20E
FY21E
Source: Company, Angel Research
PBT
1,796
2,368
3,032
% chg
25
32
28
PAT
871
1,281
1,699
% chg
2
47
33
EPS
4
6
8
ROE
9
12
14
Jaikishan Parmar
P/B
2.1
1.8
1.6
Research Analyst
P/E
23
15
12
022 - 39357600 Ext: 6810
Source: Company, Angel Research; Note: CMP as of 09/08/2019
Please refer to important disclosures at the end of this report
1
Aditya Birla Capital Ltd | Q1FY2020 Result Update
Outlook & Valuation:
We believe broad based and integrated financial offerings will enable ABCL to
benefit from finacialisation of savings. Core lending business (after adjusting
value of AMC, Life Insurance, ABML & Others) is available at 1x of FY21E BV.
We expect ABCL’s PAT to register CAGR of 42% over FY2019-21E, largely
driven by lending segment and AMC. We recommend a Buy on the stock and
an SOTP based Target Price of `118.
Exhibit 1: SOTP valuation summary
Valuation
Value/share
Particulars
Stake
Methodology
(`)
NBFC
100%
1.7x FY20E PBV
65
HFC
100%
1.7x FY20E PBV
10
AMC
51%
4% of AUM
24
Life Insurance
51%
1.75x FY18 EV
20
ABML
74%
CMP
1
Fair value per share
118
Consolidated Profit & Loss
Y/E March (` cr)
FY19
FY20E
FY21E
Segment PBT
NBFC
1,328
1,602
1,948
Life Insurance
132
144
159
Asset Management
647
673
811
HFC
107
152
213
Health Insurance
-257
-100
-
Total PBT
1,796
2,368
3,032
YoY (%)
25
32
28
Consolidated PBT
1,796
2,368
3,032
Taxes
569
758
1,001
Tax Rate (%)
32
32
33
Consolidated PAT
1,227
1,610
2,032
Minority Interest
356
329
333
Consolidated PAT Post MI
871
1,281
1,699
YoY (%)
2
47
33
Aug 09, 2019
2
Aditya Birla Capital Ltd | Q1FY2020 Result Update
Research Team Tel: 022 - 39357800
Angel Broking Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited, Bombay
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Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number INH000000164. Angel or its associates has not
been debarred/ suspended by SEBI or any other regulatory authority for accessing /dealing in securities Market. Angel or its
associates/analyst has not received any compensation / managed or co-managed public offering of securities of the company covered
by Analyst during the past twelve months.
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Disclosure of Interest Statement
Aditya Birla Capital Ltd
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
Aug 09, 2019
3
