IEA Report 8th March
IEA Report 8th March
IEA Report 8th March
IPO Note
Issue Detail Company Overview
Type 100% Book Building Avenue Supermarts ( ASL ) operates stores under D-Mart brand, which is an emerging national
Issue Size Rs.1865 Crore supermarket chain. Company offer a wide range of products with a focus on the Foods, Non-Foods
Offer Price *Rs (295 - 299)/Equity Share (FMCG) and General Merchandise & Apparel product categories.
DMart opened its first store in Mumbai in 2002 and has since expanded its retail network to 118
Min App Size 50 Shares
stores as of January 31, 2017 with a retail footprint of 3.59mn sqft across 45 cities and 9 states and
Issue Open 8-Mar-17 one Union Territory. Company plan to deepen store network in southern and western India and
Issue Close 10-Mar-17 gradually expand network in other parts of India pursuant to cluster-focused expansion strategy.
Shares Offer 6.23Cr
Face Value Rs 10 For Fiscal 2016, Maharastra contributed a majority of Revenue from Sales (62.57%) followed by
Axis Capital Ltd, Edelweiss Gujarat (18.83%), Telangana (10.15%), Karnataka (6.14%) Andhra Pradesh (1.03%), Madhya Pradesh
Lead Mgrs (0.85%) and Chattisgarh (0.43%).
Capital Ltd, HDFC Bank Ltd
Listing BSE, NSE Company operate predominantly on an ownership model rather than on a rental model. Company
Registrar Karvy Computershare Pvt Ltd open new stores using a cluster approach on the basis of adjacencies and focusing on an efficient
supply chain, targeting densely-populated residential areas with a majority of lower-middle, middle
Market Cap
18655.7 and aspiring upper-middle class consumers
(Post Issue)
> Company operates on an ownership model rather than on a rental model resulting in minimising
rental costs. It generally enters into a long term lease arrangements, where the lease period is
usually more than 30 years and the building is owned by the company.
Objects of the Issue:
Particulars Amount
Repayment or prepayment of a portion of loans and redemption or
earlier redemption of NCDs availed by the Company Rs. 1080 Cr.
Recommendation
D-Mart has NPM of 4.4% for FY17E which will further increase after debt repayment out of IPO proceeds. With ROE of 20 and P/B of 8.5
times FY17E , The company is cheaply valued compared to its listed peers. None of the other listed supermarket/ retailers are having such
light Balance sheet with better Net Profit margins. D Mart has a well executed Business Model and is attractively placed in Retailing where
the story in India is sustainable growth for longer term. We recommended SUBSCRIBE
Competitive Risks
> One of the key strengths has been ASLs ability to offer its customers value retailing, daily low prices and,
consequently, greater daily savings. Company is unable to continue to offer daily low prices pursuant to EDLC/EDLP
pricing strategy, company risk losing distinct advantage and a substantial portion of customers which will adversely
affect business, financial condition and results of operations. Further, in case of shortages, suppliers may increase
prices of products beyond control due to which company may lose competitive advantage.
> The company currently function on a low inventory level model . It typically maintains inventory levels that are
sufficient for a few days of operation.Company has inability to maintain an optimal level of inventory in stores may
impact operations adversely.
> For the nine months period ended December 31, 2016, Maharashtra and Gujarat together contributed 76.9% of
total revenue. Furthermore, as of January 31, 2017, 19 out of 22 distribution centres are located in Maharashtra
and Gujarat. Any adverse development that affects the performance of the stores or distribution centres in these
two states could have a material adverse effect on the business, financial condition and results of operations.
> Company has inability to promptly identify changing consumer preferences. Customer preferences in the markets
where the company operates are difficult to predict while changes in those preferences or the introduction of new
products by competitors could put its products at a competitive disadvantage.
Result Update Stake Sale deal will Significantly Contribute to Net Worth
CMP 324 Recently DHFL announced an agreement with its promoter to sell its 100% of
Target Price 385 share held in DHFL Pramerica Life Insurance (DPLI) (equivalent to 50% of
the paid-up capital of DPLI) to its wholly owned subsidiary DHFL Investment
Previous Target Price
Ltd (DIL). The fair market value for the shares proposed to be transferred is
Upside 19% ascertained in the range of Rs 1690 Cr to Rs 2020 Cr. To fund this
Change from Previous transaction, DIL will issue compulsorily convertible debentures (CCDs) to the
promoters entity (Wadhawan Global Capital). However this deal awaits for
the regulatory approval. If the deal is approved, it will significantly contribute
Market Data
to Capital of DHFL without any dilution with minimum increase of 25% in its
BSE Code 511072 net worth and hence company will not require capital for next 2 to 3 years.
NSE Symbol
DHFL
52wk Range H/L 339/163
3Q FY17 Result Highlight
Mkt Capital (Rs Cr) 10159
Av. Volume (,000) 281 DHFL posted 3Q FY17 PAT at Rs 244 Cr up 31% YoY owing to better NIMs
Nifty 8961 which improved by 11 bps YoY and was stable QoQ. NII growth was strong
at 21% YoY. Operating expenses were under control and grew by just 9%
YoY. C/I ratio improved to 26.5% against 29.5% a year back. AUM grew by
Stock Performance
19% YoY despite the challenging times during demonetization. Disbursement
1Month 1Year YTD
was muted to 10% growth YoY, however considering demonetization impact
Absolute 9.4 111.2 29.9 we had anticipated it even lower. Assets quality was stable with GNPA at 95
Rel.to Nifty 7.6 83.9 21.1 bps sequentially.
Oct-16
Nov-16
Jul-16
Apr-16
Feb-16
Sep-16
Feb-17
Mar-16
Jan-17
Aug-16
May-16
Concall Highlights
Profitability Metrix 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Yield% (Cal.) 11.67 11.25 11.18 11.48 11.46 11.30 10.92 11.53 12.06
Cost of Fund% (Cal.) 10.05 9.90 9.69 9.92 9.75 9.77 9.45 9.18 9.29
Spread% (Cal) 2.82 2.57 2.78 2.88 3.05 2.91 2.87 2.35 2.77
NIM% 2.77 2.89 2.96 2.86 2.87 2.96 2.91 3.05 3.07
C/I Ratio 32.18 29.73 29.97 29.03 29.46 31.76 28.11 26.09 26.48
AUM MIX %
Disbursement Growth% YoY
Housing LAP/LRF Project Others
120 35%
32%
30% 31% 31%
100 6 8 9 10 12 13
17 16 16 16 25% 24%
26%
80 16 16 22%
20%
60 18%
15%
14%
76 74 12%
40 72 72 70 69 10% 10%
20 5%
0%
0
2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
-
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Loan Mix %
BALANCE SHEET Housing Loan 83 78 75 72
FY13 FY14 FY15 FY16 LAP 11 16 18 16
Share Capital 128 128 146 292 Project 6 6 6 10
Reserves 3,109 3,447 4,490 4,725 Others - - 1 2
Net Worth 3,237 3,575 4,636 5,017 Total AUM (Rs in Cr) 36,117 44,822 56,884 69,524
Long term Debt 26,565 32,295 36,889 45,119 Borrowing Mix %
Short term Debt 876 1,595 3,637 6,437 NCD 11 20 28 33
Total Borrowing 27,441 33,890 40,526 51,556 Bank 71 68 58 53
Long Term Provision 264 331 430 583 Others 18 12 14 14
Other Liability 4,862 6,063 9,046 10,697 Resource Mobilization (Rs in Cr) 32,058 39,487 48,921 61,104
Total Liability 35,803 43,859 54,638 67,853
Fixed Assets 438 988 985 781 About the Company
Non-current investments 191 307 611 720 DHFL was founded in 1984 and is promoted by Wadhawan Group.
Current investments 85 269 396 173 Focused on low and medium income group it operates mainly in tier
Loans/Advances 34,222 41,016 51,511 62,295 1 and tier 2 cities with its presence in 363 cities. It has total AUM of
Cash & Bank Balances 513 983 676 3,408 Rs 783 Billion .
Other Assets 356 297 460 476 Chairman & MD Kapil Wadhawan
Total Assets 35,803 43,859 54,638 67,853 CEO Harsil Mehta
8
Narnolia Securities Ltd
IPO Note
Issue Detail Company Overview
Type 100% Book Building Music Broadcast is first private FM broadcaster in India which operates 91.9 FM as "Radio City"
Issue Size Rs.500 Crore brand name. Radio station has presence in 29 cities like Bengaluru, Delhi, Mumbai, Chennai, Pune,
Offer Price *Rs (324 - 333)/Equity Share Hyderbad, Ahmedabad, Nagpur, Surat etc in india till Nov 2016 and reached out to over 49.60
million listerners in 23 cities. All Phase II Radio City stations are migrated to the phase III Policy.
Min App Size 45 Shares
Company also operates 31 web radio stations on their web portal www.planetradiocity.com in six
Issue Open 6-Mar-17 languages and reached out to 12.20 million listener as of Sept 2016.
Issue Close 8-Mar-17
Shares Offer 1.48Cr Radio Station contains RJ show and film music. Famous shows of the FM station are "Love Guru" ,
Face Value Rs 10 "Kal Bhi Aaj bhi", Babber Sher Joke Studio, Radio City Super Singer etc. Company has hired 82
ICICI Securities Limited RJs, including two online web radio RJs, to conduct their shows . The studios use IP based studio
Lead Mgrs
equipment and consoles which are free from noise pick-ups & customised software to control the
Listing NSE sound quality.
Registrar Karvy Computershare Pvt Ltd In 2015, JPL(Jagran Publication Ltd) acquired a majority shareholding of the company through its
Market Cap direct holding in Spectrum and indirect holding in Crystal. In 2016, pursuant to the Scheme of
1906.0 Arrangement the radio business of SPML was demerged and subsequently transferred and
(Post Issue)
Spectrum and Crystal were merged with JPL.
No of shares ( Post & Pre Issue) Company Strategies
No of Shares (Pre Issue) 45,042,767 > Radio City has strong leadership position in market in term of popularity. Total number of lister
reached to 49.6mn across top 23 cities (AZ Research report ). Company is holds top rank in
Offer for Sale 2,658,518
Mumbai and Bengaluru and holds 2nd in Delhi.
Fresh Issue made 12195122 > Radio City is witnessing ~19% CAGR in revenue and ~54% CAGR in PAT over FY13-16 . Company
has positive cash flow from operation in last five year which indicates healtly financial
No of Shares (Post Issue) 57237889
performance .
> The advertising volume in 14 of its markets covered by AirCheck has increased at a CAGR of 15%
Bid allocation pattern between Fiscal 2014 and Fiscal 2016 . The total number of seconds advertised in top 14 cities was
QIB 50% 63.72 million . Radio Citys advertising volumes have witnessed higher growth than the industry
Non-Institutional 15% (CAGR of 10.4% over the same period) due to its higher listenership.
Retail 35%
> Company is focusing to expand and explore new market . The expansion strategy under the
Phase III Policy was driven by identifying markets after taking into consideration advertising
potential, population density, per capita income and number of existing players.
Recommendation
Music Broadcast runs 39 FM radio stations in 6 languages to 50mn listeners in 37 cities. The company has successfully migrated all its Phase II
Radio City Stations to the Phase III Policy and now enjoys an extended license period of 15 years.
High NPM of the company keeps Return ratios increasing over the long term though high capex intensity in the industry keeps the Asset
turnover depressed. As regards valuations, the company is being offered at 3.5times P/B and 33 times Price to Earnings post IPO at ROE of
10.5% which is better than its listed Peer ENIL. We recommend SUBSCRIBE
Competitive Risks
> Company's majority of sound recordings are licensed by third parties. Company pay royalties/license
fees to these third parties for the right to broadcast these sound recordings. The licensing agreements
are typically on a non-transferable and non-exclusive basis and with limited license to communicate to
public".
> Company is involved in various litigations pursuant to the Copyright Boards order dated August 25, 2010
granting compulsory licenses for broadcast of sound recordings by radio companies. If any of proceedings in
which company may be involved in is decided against them, it might lead to termination of the Compulsory
License.
> Company is substantially dependent on Government policies. There is often significant initial uncertainty
concerning the scope and impact of many liberalization and deregulation measures introduced by the
Government .
1431
1452
1226
1750
1454
1530
1307
1754
1443
1417
200
0 0
1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
5.0%
0.0%
1QFY15 2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Narnolia Securities Ltd 13
Rs,Cr
Financials 2013 2014 2015 2016 2017E
Sales 40352 50133 53319 62441 66812
Net Profit 9429 10656 12372 13678 14362
ROE 24.8% 23.9% 24.4% 23.7% 21.5%
P/B 4.4 4.2 5.0 4.8 3.3
BINEETA KUMARI Div Yield 1.5% 1.9% 2.0% 2.0% 2.5%
bineeta.kumari@narnolia.com
Narnolia Securities Ltd 15
Please refer to the Disclaimers at the end of this Report
INFY
Investment Arguments
The Management has lowered its revenue growth guidance for FY2017. The company has issued 8.4%-8.8% CC growth v/s
8%-9% QoQ CC growth guidance earlier. This implies 4QFY2017, CC revenue growth of 0.3-1.8% QoQ. In 2QFY2017, the guidance was
reduced to factor the impact of ramp-down in RBS, softness/uncertainty in some other clients, and slower growth than anticipated in
some service lines.
The company expects to lead industry growth and reach a milestone of achieving sales of US$20bn by FY2020. The Management
believes the traditional IT services model is dying and a structural change is taking place in the industry. Pricing pressure is being
witnessed in commoditized services, thus necessitating the company to pursue newer growth avenues, including acquisitions in areas
like automation. The outsourcing services provider is therefore looking to
ramp up its productivity through automation and is looking for acquisitions to boost growth.
As part of its Vision 2020 (target to have US$20bn revenues at 30% operating margins and US$80,000 per employee revenue
productivity by CY2020), the Management expects acceleration in revenue growth and margin improvement to reflect ahead of the
increase in revenue productivity.
The company plans to utilize cash properly through increased dividends and acquisitions, so that it can increase its capital
efficiency.
Result Update L&T reported its Q3FY17 result in line with our estimates. Consolidated
CMP 1470 revenue grew by 1.4% YoY to Rs. 26287 Cr as compared to Rs. 25928 Cr in
Target Price 1780 same period previous year on the back of strong growth of 13% in
Previous Target Price hydrocarbon vertical. Standalone business remained flat YoY to Rs. 15946
Cr as against Rs. 15868 Cr in previous year. However EBITDA margin on
Upside 21%
consolidated basis has improved by 140 bps YoY to 9.6% as against 8.5%
Change from Previous
on account of margin improvement in Heavy Engineering and Hydrocarbon
business. Consolidated Order Inflow during the quarter was Rs. 34900 Cr,
Market Data down by 9% YoY. Unannounced Orders were Rs. 22300 Cr. Mgt. has cut
BSE Code 500510 down the order intake guidance for FY17 to 10% plus from 15%. Reduced
NSE Symbol LT order intake guidance due to deferment in finalization of orders.
52wk Range H/L 1615/1055
Mkt Capital (Rs Cr) 120,708
Av. Volume 92026 Muted Revenue growth, Strong Operating Margin:-
Nifty 8880 Revenue growth remained muted due to demonization, however the
operating margin has improved by 140 bps on a back of improved
Stock Performance performance of Heavy Engineering, Hydrocarbon business and Infra
1Month 3 Month 1Year business. Heavy Engineering has reported EBITDA margin of 20.3% as
compared to 1.6% a year back led by operational efficiency. Close out of
Absolute 1.4 7.3 32.4
legacy orders, Operational efficiency and improved project execution have
Rel.to Nifty -1.8 -2.1 6.1
helped to post better numbers in Hydrocarbon business. Infra business
margin improved by 110 bps to 8.3% on account of the execution of better
Share Holding Pattern-% margin projects. Close down of legacy projects, margin improvement scope in
3QFY17 2QFY17 1QFY17 Heavy civil engineering & T&D business and execution of better margin
Promoters 0% 0% 0% projects in infra business will help to post strong operating margin going
Public 100% 100% 100% forward. Management has maintained 50 bps of margin improvement
Others guidance in FY17.
Total 100% 100% 100%
Healthy Order:-
Company Vs NIFTY Order book at the end of the Q3FY17 stands at Rs. 258600 Cr which
140
provides two and half year revenue visibility. However, management has cut
LT NIFTY
down order intake guidance for FY17 to 10%plus from 15% earlier.
130 Management has lower down guidance due to deferment in finalization of
120 some of the projects. We continue to expect healthy order inflow in next year.
Despite muted revenue growth in Q3FY17, management is confident to
110
achieve 10%revenue growth in FY17. It can achieve higher than that if the
100 company gets some clearance in infra business. The situation in terms of
obtaining approval has shown some sign of improvement.
90
Financials Q3FY17 Q2FY17 Q3FY16 YoY % QoQ %
80 Sales 26287 25022 25928 1% 5%
Jul-16
Feb-16
Sep-16
Feb-17
Jan-17
Dec-16
Jun-16
Aug-16
May-16
Oct-16
Nov-16
Apr-16
Mar-16
Management lower down sales guidance to 10% from 12-15%. It can do better if it gets some project related clearance.
Order guidance cut down to 10% plus from 15%
Maintained 50n bps margin improvement in FY17
Real estate: Shifting of factories has helped LT to commercially monetize the land bank (Chennai, Bangalore and Mumbai). Lower
interest rate would lead to revival in demand of residential realty.
Toll Collection suspended for the 23 days and lost 100 Cr of toll, will get compensation for the same
Rs. 800 Cr of loss due to demonization at PBT level
Canadian pension fund has subscribed preference share of Rs.2000 Cr and convert based on their option.
Management expects Power business to pick up after two years once manufacturing gets better.
Heavy Eng.:- Better margins in process and defense business
Margin improved in Hydrocarbon as the legacy projects completed.
Mumbai Metro Phase 3 order is stuck due to PIL against MMRDA.
110 bps margin improved in Heavy civil engineering and T&D on account of operation efficiency.
Power :- Lower order book led to lower execution, will tough to get new orders.
Mgt. expects to pick up in Power business after two years once manufacturing picks up
Company look to monetize Nabha Power plant
Seen political and other issues at Hyderabad metro project. 70% of the project is completed and schedule completion is
June 17 but it will extend.
Hydrocarbon:- International business driving the growth and margin improved on close of legacy projects.
Expect to close Kattupali port sale transaction by Q4FY17. L&T has sold Kattuppali port to Adani ports.
Demand in hydrocarbon business is weak due to lower oil price
L&T is the largest Engineering and Construction Company in India. It has presence in Construction, Hydrocarbon Eng., Power,
Heavy Eng., Shipbuilding- defense and Merchant, IT, Finance, Realty and Metro. Revenue growth in Q3FY17 was muted but strong
operating performance supported the bottom-line. Despite muted revenue growth in Q3FY17, management is confident to achieve
10% revenue growth in FY17 coupled with improvement in operating margins based on the operational efficiency. The company
has closed out some legacy projects in hydrocarbon business, which will help to post better margins going ahead. We expects to 33
bps improvement RoE in FY17. Hence, we recommend to BUY with a target price of Rs.1780.
Domestic International
200000
180000
160000
140000
120000
75600
75300
73000
70000
69255
68348
62500
100000
58175
57888
56450
80000
60000
156512
169350
174525
176500
175752
187245
180000
181900
178800
183300
40000
20000
0
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Domestic International
35700
33034
40000
29512
28372
35000
26180
23732
30000
20526
18590
18300
25000
16500
13888
13200
20000
12320
11900
11168
10574
10010
15000
8100
6766
6228
10000
5000
0
2QFY15 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Narnolia Securities Ltd 20
Share Holding Pattern-% Domestic Advances growth was backed by Retail Growth.
3QFY17 2QFY17 1QFY17 Advances growth in this quarter moderated to 13% YoY mainly due to
Promoters 26.1 26.4 26.3 repayment in overseas loan linked to FCNR Deposits. The domestic loan
portfolio of bank grew by 17.5% YoY while it saw contraction of 41% YoY in
Public 73.9 73.6 73.7
overseas loan. Now the domestic loan book constitutes 96% of the
Others 0.0 0.0 0.0
advances. Healthy retail loan growth continued in personal loan, credit card,
Total 100.0 100.0 100.0 home and LAS which YoY grew by 32%, 20%, 25% and 36% respectively.
On the vehicle segment auto, commercial vehicle and two-wheeler grew by
Company Vs NIFTY 16% each YoY. On sequential basis some of the loan product got impacted
due to demonetization. Business banking book contracted by 3% QoQ
150 HDFCBANK NIFTY largely due to huge repayment in demonetization period.
140
130
NIM declined by 20 bps YoY and 10 bps QoQ to 4.10% reflecting the impact of demonetization. NIM got impacted
mostly due to lower loan growth as well as negative carry of interest for fortnight on excess liquidity imposed by RBI.
Going forward CASA will have major impact on NIM. However management believes the NIM to range between 4%-
4.3%.
Other income growth moderated to 9% YoY. Fee income registered the 10% growth YoY. The fee income was mainly
impacted by the waive-off of card fee during the demonetization period. Management highlighted that the third party
distribution fee growth was also muted largely impacted by muted insurance income. However management hopes to
recover the same in further quarter. FX & Derivatives income grew by 7% YoY. Treasury gain grew by 22% YoY.
Profitability Metrix 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 YoY(bps) QoQ(bps)
Yield On Earning Assets % 10.5 10.5 10.6 10.4 10.1 9.9 9.8 9.7 9.6 -0.58 -0.11
Cost of Deposits % 5.9 5.9 6.0 6.0 5.8 5.6 5.5 5.4 5.3 -0.46 -0.10
NIM % 4.4 4.4 4.3 4.2 4.3 4.3 4.4 4.2 4.1 -0.20 -0.10
Other Income as a % of 30.8 29.9 27.8 27.6 28.9 27.8 26.5 26.6 27.4 -1.45 0.82
Total
C/I Net%Income
Ratio 42.0 44.9 45.2 45.4 42.3 44.4 45.0 44.7 42.3 -0.01 -2.42
Provision/PPP % 11.7 12.2 15.0 13.5 11.4 11.6 14.9 12.4 10.8 -0.57 -1.60
Tax % 33.8 32.3 34.6 34.2 33.9 33.5 34.6 34.5 34.4 0.47 -0.09
PAT/Total Net Income % 33.9 32.7 30.5 31.1 33.8 32.7 30.6 31.7 33.8 -0.02 2.04
NII Growth % (YoY) 23.0 21.4 23.5 21.2 24.0 24.0 21.8 19.6 17.6 -6.46 -2.10
Opex Growth % (YoY) 19.4 21.4 25.9 19.8 21.7 18.9 19.2 16.2 15.2 -6.49 -1.07
PPP Growth % (YoY) 22.9 24.9 26.2 24.2 20.0 21.5 20.0 19.5 15.2 -4.81 -4.24
PAT Growth % (YoY) 20.2 20.6 20.7 20.5 20.1 20.2 20.2 20.4 15.1 -4.97 -5.27
Yield On Earning Assets % Cost of Deposits % NIM % PAT Growth % (YoY) NII Growth % (YoY)
C/I Ratio %
12.0
30.0 47.0
10.0
25.0 46.0
8.0 45.0
20.0 44.0
6.0
15.0 43.0
4.0 42.0
10.0
41.0
2.0 5.0 40.0
- - 39.0
30.0 0.50
29.0 0.40
28.0
0.30
27.0
0.20
26.0
25.0 0.10
24.0 -
We continue to like HDFC Bank given its strong fundamentals, steady loan growth, adequate capital, best in assets quality, strong
branch network and intensive digitalization initiatives. While 3Q FY17 saw some uneven activities, we expect the operations of
banking to come to its normal situation. Despite intense competition, we expect margins of HDFCBANK to sustain in the range of
4%-4.3% backed by normal CASA level of 40% and healthy growth in retail assets. Earning momentum will be maintained with
core revenue of 19% plus growth going forward backed by healthy domestic loan growth with higher yield products. We expect
RoE of 19% going forward. Recent rally in the stock has led to achieve our previous target price of Rs 1400. However despite this
rally we dont think to exit the stock at current levels given its strong fundamentals and recommend must have in the portfolio. Also
HDFCBANK has performed much better than its peers in the industry. We maintain HOLD in this stock with the target price of
Rs 1460.
21
Narnolia Securities Ltd
Please refer to the Disclaimers at the end of this Report
HDFCBANK
Concall Highlights:
>> Around Rs 13000 Cr (US $2 Bn) of overseas loan got repayment linked to FCNR Deposits.
>> Around Rs 20000 Cr (US $3 Bn) FCNR Deposits got redemption during the quarter.
>> Domestic loan book is now at 96% of the portfolio. While it grew by 17% YoY.
>> Due to demonetization bank witnessed higher repayment and prepayment in Overdraft and cash credit facility which
affected the loan growth. There was slightly muted disbursement on retail lending.
>> Decline in NIM was due to various factor including the impact of negative carry of interest on excess liquidity
imposed by RBI during the quarter to some extent. However management expect the NIM in the range of 4-4.3% going
forward.
>> Other expenses was lower as commission to dealer got impacted due to muted retail loan disbursement. There was
also reduction in staff number.
>> Fee income was impacted due to waive off of fee on card business. Also third party fee was muted mainly due to
lower insurance business fee.
1.20
74
1.00 73
0.80 72
0.60 71
0.40 70
69
0.20
68
- 67
Advances 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Net Advances (Rs in Cr) 347088 365495 382010 418541 436364 464594 470622 494418 495043
Advances Growth YoY % 16.97 20.63 22.40 27.89 25.72 27.11 23.20 18.13 13.45
>> Growth QoQ % 6.05 5.30 4.52 9.56 4.26 6.47 1.30 5.06 0.13
Deposits 3QFY15 4QFY15 1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Deposits (Rs in Cr) 414128 450796 484175 506909 523997 546424 573755 591731 634705
>> Growth YoY % 18.59 22.72 30.13 29.75 26.53 21.21 18.50 16.73 21.13
>> Growth QoQ % 6.00 8.85 7.40 4.70 3.37 4.28 5.00 3.13 7.26
CA % 13.79 16.32 13.82 13.77 14.13 16.18 13.26 13.38 15.95
SA % 27.11 27.71 25.81 25.95 25.85 27.06 26.61 27.03 29.40
CASA % 40.90 44.03 39.63 39.72 39.98 43.25 39.87 40.41 45.36
>>CASA Growth YoY % 11.00 20.58 19.92 19.41 23.67 19.05 19.24 18.76 37.43
>> Growth QoQ % 0.46 17.18 -3.34 4.94 4.04 12.81 -3.19 4.51 20.40
Credit Deposit Ratio% 83.81 81.08 78.90 82.57 83.28 85.02 82.03 83.55 78.00
Risk Disclosure & Disclaimer: This report/message is for the personal information of
the authorized recipient and does not construe to be any investment, legal or taxation
advice to you. Narnolia Securities Ltd. (Hereinafter referred as NSL) is not soliciting any
action based upon it. This report/message is not for public distribution and has been
furnished to you solely for your information and should not be reproduced or
redistributed to any other person in any from. The report/message is based upon publicly
available information, findings of our research wing East wind & information that we
consider reliable, but we do not represent that it is accurate or complete and we do not
provide any express or implied warranty of any kind, and also these are subject to change
without notice. The recipients of this report should rely on their own investigations,
should use their own judgment for taking any investment decisions keeping in mind that
past performance is not necessarily a guide to future performance & that the the value of
any investment or income are subject to market and other risks. Further it will be safe to
assume that NSL and /or its Group or associate Companies, their Directors, affiliates
and/or employees may have interests/ positions, financial or otherwise, individually or
otherwise in the recommended/mentioned securities/mutual funds/ model funds and
other investment products which may be added or disposed including & other
mentioned in this report/message.