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Financials
1QFY19E Results Preview
6 Jul 2018
Darpin Shah [email protected] +91-22-6171-7328
Madhukar Ladha [email protected] +91-22-6171-7323
Pranav Gupta [email protected] +91-22-6171-7337
Kaushik Utpat [email protected] +91-22-6171-7334
2
FINANCIALS : 1QFY19E RESULTS PREVIEW
More of the same
Like previous quarters, ebb and flow in the BFSI space is expected to continue in 1QFY19. After forceful recognition in 4Q, the focus shifted to resolutions in NCLT cases. However, the pace of resolutions continues to disappoint and remains a key overhang for corporate lenders. Despite some pickup in overall CAPEX,
corporate growth is expected to remain sluggish while retail products are set to dominate. Given the upward trend in interest rates (G-Sec), RBI extended MTM dispensation granted to banks allowing them to spreads provisions over FY19. This move should provide some respire to large PSBs.
Given the uptick in CV sales and tighter regulations on
overloading, vehicle financiers are expected to have a solid quarter. With the shift to 90DPD complete for the industry, major blips in asset quality are unlikely. However, the precise impact of Ind-AS applicability remains a mystery. As competition intensifies in the housing finance industry, we expect growth to remain under check. However, rising COF should be compensated by higher yields as HFCs inevitably follow hikes in MCLR by banks.
Public sector banks (PSBs)
Post the bloodbath in 4Q, PSBs should see some moderation in stress
accretion. However, the uptick in yields throughout the quarter will
keep provisions elevated. Additionally, aging and sluggish resolutions
are expected to pile further pressure on profitability. We expect SBIN
to report a PBT level loss of the 3rd consecutive quarter primarily
driven by high provisions (assuming no usage of RBI dispensation for
MTM provisions) and some NIM compression. However growth is
expected to pick up. Despite the adverse yield movement (and
elevated provisions for MTM), BOB is expected to report a small
profit. However, the recovery in growth is expected to remain on
track and primarily driven by the domestic book.
Private sector banks
For yet another quarter, the divergent performance across private
banks is set to continue. The subdued show for corporate lenders will
continue as asset quality woes will weigh on earnings though growth
picks up. On the flip side, retail focussed banks are expected to report
stellar numbers with robust growth, steady NIMs and stable asset
quality.
NBFCs
We expect the disbursal momentum to sustain for vehicle finance
NBFC’s leading to robust AUM accretion. In the first quarter of the
90DPD era, we expect asset quality to remain under check given the
focus in collection efficiency. The upward movement in G-Sec yields
may put some pressure on NIMs, albeit marginally during the qtr.
SCUF is expected to deliver healthy AUM growth driven by strong
SME disbursals. However, earnings may remain under pressure as the
co may provide for an exposure to a group company under stress.
Utilization of the RBI dispensation on MSME loans will be keenly eyed
HFCs
While growth in the housing space has been encouraging (as per the
RBI data for Q1FY19), the top players are expected to gain market
share. NIMs for the entire industry are expected to compress as yield
movement has been unfavorable. We expect 15% and 11% growth for
LICHF and REPCO respectively. The progress of resolutions under
SARFAESI will be keenly eyed for REPCO and resolutions in developer
book for LICHF.
3
FINANCIALS : 1QFY19E RESULTS PREVIEW
SFBs
For the MFI focussed SFBs, we expect provisioning to normalize given
the pain throughout FY18. We expect robust AUM expansion for
EQUITAS and UJJIVAN. Gaining CASA traction, cost efficiency and book
diversification will be the key monitorables.
For AUSFB, the growth momentum Is set to continue as product
offerings widen and vintage of branches increases. Profitability is
expected to remain steady given stable asset quality.
Life Insurance
1Q for the life insurance companies is generally a slower quarter-
FY19TD YoY Ind. NBP/APE growth has just been 8%/1%. This is on the
back of a high base 1QFY18 growth was at 46% YoY. We expect IPRU
face APE decline of ~20% on higher base (1QFY18 growth was 75%).
MAXL to report APE growth of ~15% YoY while we expect SBILIFE to
report APE growth of ~10% YoY; Moderation for SBILIFE is as a result
of higher base observed in 1QFY18 of 53%.
View
We reiterate our faith in retail focussed private banks given the
rampant under-penetration and digital push. Even after accelerated
recognition throughout FY18, we believe corporate lenders will
remain under pressure as aging provisioning kicks in. Sluggishness in
NCLT resolutions is an additional overhang.
We prefer KMB, RBK, CUBK and DCBB in the retail space. Despite
regular pushback, we believe ICICIBC is best placed amongst the
corporate lenders given higher recognition, better performing subs
and higher delta incase NCLT resolutions play out.
Despite rich valuations and jump in interest rates, CIFC is our top
pick in the NBFC space largely owing to best in class metrics across
parameters.
Our rough calculations suggest that if the contingent liability
(towards SVL) for SHTF crystallizes, our FY20E ABV could drop by
~6%. Hence we are reducing our target multiple from 2.75x to 2.50x.
Similarly for SCUF, the company’s exposure to related parties (Rs
4bn) could create an additional liability and erode FY20E ABV by
~6%. Hence, we are downgrading our multiple from 2.50x to 2.25x.
While we are positive on the long term prospects of life insurers in
India, we expect FY19 to be challenging in terms of growth,
especially after two blockbuster years. For FY19E we expect Ind.
NBP growth to come in around 11-14% and Ind. APE growth to come
in at 8-10%. We expect the top 4 players namely SBILIFE, IPRU, HDFC
Life and MAX Life to continue to gain market share. At current levels
we believe MAXF adequately builds in risks and offers the best risk
reward ratio; accordingly it is our top pick.
4
FINANCIALS : 1QFY19E RESULTS PREVIEW
1QFY19E: Rising G-Sec Cuts Profits
COMPANY 1QFY19E
OUTLOOK WHAT’S LIKELY KEY MONITORABLES
SBIN AVG
Core earnings to grow at ~11% YoY (down ~2% QoQ) with a marginal uptick in loan growth and NIM compression
Flattish non Interest Income (albeit down sequentially) and 12% rise in opex will lead to tepid PPOP growth (merely ~3%)
With elevated provisions (LLP and MTM), we expect SBIN to report PBT loss for the 3rd consecutive quarter
Slippages from the watchlist and relapse from restructured book
Progress on NCLT exposures and provisions on the same
Utilization of RBI’s relaxation for MTM provisions
Comments on growth
BOB AVG
GNPAs expected to be stable with normalization of slippages and sustained momentum in recoveries and upgrades. NCLT resolution of one large steel exposure is expected to further boost recoveries.
Mid-teen growth in domestic book largely driven by retail loans; overseas book growth to remain muted
Healthy NII growth (+23%) led by healthy loan growth and lower interest reversals
Treasury gains to further dip with sustained rise in yields.
Higher MTM, lower treasury gains and flattish LLP (YoY) will keep PAT subdued
Slippages from the watchlist and relapse from restructured book
Progress on NCLT exposures and provisions on the same
Utilization of RBI’s relaxation for MTM provisions
Comments on consolidation and change in guard
5
FINANCIALS : 1QFY19E RESULTS PREVIEW
1QFY19E: Mixed Show For Private Banks
COMPANY 1QFY19E
OUTLOOK WHAT’S LIKELY KEY MONITORABLES
KMB GOOD
Stable NIMs and robust loan growth (~24%) will lead to
core earnings growth of 20%
Non-interest income to dip QoQ owing to lower fee
income sequentially
Provisions to remain flat as asset quality is expected to be
stable
Profitability to remain intact (+21% YoY) given strong
growth and stable margins
Plan for the mandated reduction in promoter
stake
Progress on 811 and digital initiatives
Comments on CASA trends
Subsidiary performance (especially KMP)
ICICIBC AVG
NII to grow a mere 7% despite a 12% uptick in advances as
NIM pressure is expected to continue
Sharp sequential decline in non-interest income largely
due to stake sale in ICICI sec in 4QFY18.
Slippages to moderate post the accelerated recognition in
the previous quarter
Provisions will remain above normal levels owing to aging
of NPAs
Net earnings to remain subdued, down ~61/22% YoY/QoQ
Specific comments in relation to the CEO and
alleged misconduct
Movement in impaired assets and watchlist
Progress on resolutions
Commentary on growth and margins
AXSB AVG
We expect continued tepid core income growth of ~7/4%
YoY/QoQ
Loans expected to grow ~2% sequentially (+16% YoY)
Other income should also drop primarily due to lower
treasury gains
Elevated LLP (+61% YoY) will keep profitability capped.
PAT is expected to drop 82% YoY
Movements in the below investment grade book
and status of exposures
Succession plan for the outbound CEO
Commentary on loan growth and margins
6
FINANCIALS : 1QFY19E RESULTS PREVIEW
1QFY19E : Mixed Show For Private Banks
COMPANY 1QFY19E
OUTLOOK WHAT’S LIKELY KEY MONITORABLES
IIB GOOD
Core income growth of ~19% YoY will be supported by strong loan growth (+27% YoY) and stable NIMs
Stable fee income and lower treasury income will limit non interest income growth to merely 2% QoQ
With stable asset quality performance, provisions are expected to dip ~2% sequentially
PAT growth of ~22% YoY
Comments on integration of Bharat Financial
SA traction
Comments on growth (especially vehicle finance segment) and NIM
RBL GOOD
Core NII growth of ~38/5% YoY/QoQ to be driven by ~36% YoY jump in advances and stable NIMs
Other income to remain flat owing to lower treasury gains
Opex to remain higher (+38% YoY) as the bank continues to invest in technology
The growth trend in PAT is set to continue with a 30/3% YoY/QoQ growth for the quarter
The movement in loan mix
Details of the cards business and retail profitability
Progress towards vision 2020
FB AVG
~2% sequential growth In NII primarily driven by lower interest reversals and loan growth of 23% YoY
NIM is expected to remain stable QoQ
NPA provisions are expected to moderate (down ~28% QoQ) owing to accelerated stress recognition in 4Q. MTM related provisions are expected to remain elevated
PAT down ~13% YoY, albeit up ~27% sequentially
Update on the progress of new retail products i.e. CV, cards etc.
Asset quality: Movement in the Corp & MSME segment
NIM movement & efficiency ratios
7
FINANCIALS : 1QFY19E RESULTS PREVIEW
1QFY19E : Mixed Show For Private Banks
COMPANY 1QFY19E
OUTLOOK WHAT’S LIKELY KEY MONITORABLES
CUB GOOD
Despite loan growth of ~18% YoY NII growth will remain lower (~12% YoY) owing to come NIM pressure
Lower treasury gains will lead to flattish non interest income
Slight deterioration in C-I ratio largely due to higher staff costs (wage revision)
With lower stressed exposures, we expect provisions to dip YoY. However there may be a slight uptick sequentially as CUB is expected to further provide for O/S SRs
Net earnings should remain stable QoQ
Comments on the growth environment
Utilization of the MSME dispensation allowed by RBI
Movement in C-I ratio
Provisions on SRs
KVB AVG
Despite healthy growth (+4% QoQ), NII is expected to dip ~6% sequentially owing to a one off in 4QFY18
Other income should dip ~16/4% YoY/QoQ on account of lower treasury gains
PPOP expected to dip ~7% QoQ
We have factored elevated provisioning (+78 YoY) as accelerated NPA recognition continues
PAT to de-grow 45% YoY, albeit up ~62% QoQ
Asset quality movement with slippages from the watchlist / other stressed assets
Utilization of the MSME dispensation allowed by RBI.
An update on new product launches in retail and growth in granular businesses
DCBB GOOD
Core earnings growth (~16%) to be driven by 27%+ loan growth and superior NIMs.
Non interest income is expected to dip after a seasonal fee spike in 4Q and moderation in treasury profits
C-I ratio to rise to 62% (+300bps QoQ).
We have factored a in a ~4% QoQ jump in provision despite a calc PCR of 75.7%.
Comments on growth and margins
Specifics on reduction of C/I ratio
Asset quality trends in the LAP book given the accretion over FY18
Competition in the focus business (LAP)
8
FINANCIALS : 1QFY19E RESULTS PREVIEW
1QFY19E : Healthy Growth For SFBs
COMPANY 1QFY19E
OUTLOOK WHAT’S LIKELY KEY MONITORABLES
AUSFB GOOD
Robust core earnings growth (+55% YoY) primarily driven by
a 60% YoY surge in AUM.
Opex is expected to increase further (+80% YoY) due to
ramp up in the banking services
We expect a slight uptick (+3/1% YoY/QoQ) in provisioning
costs
PAT is expected to remain stable sequentially
Growth in advances and performance of new
products
Opex trajectory
Traction in CASA franchise
EQUITAS GOOD
Healthy NII growth of 22% led by strong AUM growth and
some margin compression
Lower Non interest income as base qtr included lumpy PSLC
income
Provisioning cost is expected to be lower YoY (stable QoQ)
On smaller base, PAT expected to jump 3.8x YoY and 69%
QoQ
Run down in MFI book, if any
Growth in Non-MFI book
Efficiency movement
PSLC Income
CASA traction
UJJIVAN GOOD
NII to increase by ~2% QoQ despite an expected NIM
compression
AUM expected to grow ~35/9% YoY/QoQ
Provisions to be lower post the pain taken throughout
FY18.
PAT is expected to Rs 728mn
Loan book growth; mix between MFI and Non-
MFI book
Sequential movement in opex and future
guidance
9
FINANCIALS : 1QFY19E RESULTS PREVIEW
1QFY19E : Robust Quarter For VF NBFCs, HFCs may see NIM pressure
COMPANY 1QFY19E
OUTLOOK WHAT’S LIKELY KEY MONITORABLES
SHTF GOOD
Healthy disbursals growth (YoY) is expected to drive AUM
growth of ~18% YoY.
NII growth of 17% with some NIM compression
Opex to gradually rise (added branches and employees
over last couple of qtrs)
We have conservatively factored higher provisions (+32%
YoY ) will lead to flattish PAT YoY (+3x QoQ on a smaller
base)
Comments on growth and NIM with rise in
interest rates
Comments on guarantees given on behalf of
SVL (Rs 8.7bn)
MMFS GOOD
Healthy and broad based YoY growth in disbursals
AUM growth to be in higher teens
NII growth is expected to be 31% YoY (-14% QoQ) with
NIM improvement
PAT to rise 4.4x YoY (-50% QoQ) with a drop in provisions
(19% YoY)
Comments on recoveries and demand in rural
India
Comments on growth
Performance of housing subsidiary
LICHF MUTED
NII to grow at 11% YoY with steady AUM growth (15%)
Spreads expected to be marginally lower on sequential
basis
PAT expected to grow 19% YoY with ~60% drop (albeit up
QoQ) in provisions.
Disbursement mix
Resolutions in the developer book
Comments on NIM and prepayment rate
10
FINANCIALS : 1QFY19E RESULTS PREVIEW
1QFY19E : Robust Quarter For VF NBFCs, HFCs may see NIM pressure
COMPANY 1QFY19E
OUTLOOK WHAT’S LIKELY KEY MONITORABLES
CIFC GOOD
VF disbursals expected to be healthy (YoY), while gradual
uptick in HE to continue
Core earnings growth of ~33% YoY, with ~24% AUM
growth and NIM improvement (albeit down QoQ)
Despite factoring in a steep rise in opex, PPOP is expected
to grow at a healthy ~27% YoY
We have conservatively factored higher provisions on
QoQ basis
Net earnings to grow ~44/2% YoY/QoQ
Comments on the HE (LAP) business: Disbursals,
AUM growth, margins and asset quality
Traction in the VF business
Improvement in operational efficiency
SCUF GOOD
Pick up in disbursals (growth expected to be in the range
of 18-20%)
AUM growth to reflect the disbursals growth with steady
repayments and higher SME proportion
We expect 14% YoY NII growth after factoring some NIM
compression
With 26% rise in provisions (on conservative basis), PAT
expected to be muted (+4% YoY; albeit up ~4.3x QoQ)
Comments on growth post GST
Utilisation of RBI’s dispensation on MSME loans
PCR movement
Comments on exposure to SVL and its
subsidiary (Rs 4bn)
REPCO MUTED
Core earnings to de-grow ~2% as growth (+11% YoY)
remains sluggish
Improvement in asset quality expected on the back of
resolutions through SARFAESI
Overall opex to dip ~5% sequentially as other opex
normalizes
Net earnings to slightly dip
Recoveries through SARFAESI and progress on
the residual stock
Growth trends and competition in the region
Comments on margins
11
FINANCIALS : 1QFY19E RESULTS PREVIEW
1QFY19E : Lower Headline growth on High Base
COMPANY 1QFY19E
OUTLOOK WHAT’S LIKELY KEY MONITORABLES
SBI Life NEUTRAL
Higher base (1QFY18 was +53% YoY) to drag overall
growth nos; APE grow to slow down to +8.3% YoY
Reported 1QFY19 VNB margin to be 16.0-16.5%
compared to 16.5% in FY18.
Share of protection to improve
ULIP is expected to be key driver of premium growth
Adj. VNB margins
Channel and product mix
Persistency trend
ICICI Pru Life MUTED
APE decline of 19.2% due to high base (1QFY18 was +75%
YoY) and volatile equity market
ULIP is expected to be key driver of premium growth
Share of protection to improve
Full year VNB margin is expected to come in flat ~16.5% ,
same as FY18
Protection mix improvement
Persistency trend
Channel and product mix
Max Life GOOD
APE to grow by ~15% YoY
Does not report VNB margins on a quarterly basis however
has guided for ~150 bps yearly improvement in margins
Growth in other channels
Protection Premium Growth
Persistency Trend
12
FINANCIALS : 1QFY19E RESULTS PREVIEW
Financial Summary
COMPANY NII (Rs bn) PPOP (Rs bn) APAT (Rs bn)
1QFY19E YoY (%) QoQ (%) 1QFY19E YoY (%) QoQ (%) 1QFY19E YoY (%) QoQ (%)
Public Sector Banks
SBIN 195.7 11.1% -2.0% 122.6 3.2% -22.8% (13.2) -165.8% -82.9%
BOB 41.7 22.6% 4.3% 28.0 5.6% 4.9% 2.1 4.5% -106.9%
Private Sector Banks
KMB 27.0 20.4% 4.8% 19.9 25.0% -1.2% 11.1 21.2% -1.6%
ICICIBC 59.7 6.8% -0.9% 57.3 10.6% -23.7% 8.0 -60.9% -21.5%
AXSB 49.2 6.6% 4.0% 38.7 -9.8% 5.4% 2.4 -81.9% -110.8%
IIB 21.1 18.7% 4.9% 18.0 13.1% 1.6% 10.2 21.8% 7.0%
RBK 5.2 38.3% 4.5% 3.9 24.5% 1.2% 1.8 29.5% 2.5%
FB 9.5 19.1% 2.2% 5.4 -3.0% -8.1% 1.8 -12.7% 26.6%
CUB 3.8 12.2% 4.4% 3.0 1.4% 2.3% 1.5 10.3% 1.7%
KVB 6.1 12.6% -5.7% 4.5 -0.7% -6.9% 0.8 -44.7% 61.8%
DCBB 2.7 15.9% 2.5% 1.3 -4.4% -7.9% 0.6 -10.8% -9.4%
Small Finance Bank
AU 2.8 55.1% -0.8% 1.5 23.4% -0.6% 0.8 32.2% -1.6%
Equitas 2.6 22.7% 6.9% 1.0 50.9% 55.3% 0.6 278.5% 69.0%
Ujjivan 2.7 98.4% 1.8% 1.3 188.4% -3.1% 0.7 NA 12.3%
NBFCs
MMFS 11.3 31.3% -13.5% 6.7 36.6% -19.1% 2.1 344.7% -50.4%
SHTF 15.2 -4.3% 2.0% 14.2 13.8% 2.2% 4.5 -0.6% 208.5%
LICHF 10.1 11.1% 1.0% 9.1 10.4% 4.8% 5.6 18.6% 3.4%
CIFC 9.2 32.6% 3.2% 5.3 27.2% 3.2% 3.0 43.9% 2.1%
SCUF 9.3 13.8% 14.4% 5.7 13.6% 16.0% 2.1 5.9% 336.6%
REPCO 1.1 19.3% -1.7% 1.0 16.5% -0.8% 0.5 21.8% -2.7%
Source: Banks, HDFC sec Inst Research
13
FINANCIALS : 1QFY19E RESULTS PREVIEW
Financial Summary
COMPANY APE (Rs bn) VNB Margin (%) VNB (Rs bn)
1QFY19E YoY (%) QoQ (%) 1QFY19E YoY (bps) QoQ (bps) 1QFY19E YoY (%) QoQ (%)
Insurance
SBI Life 13.9 8.3 -48.3 16.3 NA NA 2.3 NA NA
ICICI Prudential 13.8 -19.2 -37.8 16.5 NA NA 2.3 NA NA
Max Financial 5.2 12.6 -61.5 NA NA NA NA NA NA
Source: Banks, HDFC sec Inst Research
14
FINANCIALS : 1QFY19E RESULTS PREVIEW
Peer Valuation
Source: HDFC sec Inst Research, #Adjusted for subsidiaries
MCap (Rs bn)
CMP (Rs)
Rating TP
(Rs)
ABV (Rs) P/E (x) P/ABV (x) ROAE (%) ROAA (%)
FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E FY18E FY19E FY20E
PSU Banks
SBIN # 2,289 256 BUY 328 93 137 175 -21.4 13.4 6.1 1.68 1.14 0.89 -3.3 4.8 9.8 -0.21 0.29 0.60
BOB 262 113 BUY 182 75 108 138 -12.3 15.0 7.4 1.51 1.05 0.82 -6.1 4.5 8.6 -0.34 0.27 0.50
PVT Banks
KMB# 2,601 1,365 BUY 1,371 175 207 238 52.0 39.5 30.8 6.37 5.28 4.48 13.2 13.8 14.9 1.72 1.82 1.87
ICICIBC# 1,746 272 BUY 377 105 126 150 17.4 11.5 7.9 1.73 1.34 1.01 7.3 9.5 9.8 0.81 1.00 1.17
AXSB 1,332 511 NEU 538 184 226 269 475.7 26.1 14.0 2.78 2.26 1.90 0.5 7.7 12.9 0.04 0.69 1.13
IIB 1,169 1,964 BUY 1,966 379 435 503 32.7 30.4 24.5 5.19 4.52 3.90 16.5 15.4 16.6 1.80 1.56 1.56
RBK 235 564 BUY 582 152 170 194 37.3 26.6 20.3 3.71 3.31 2.91 11.5 12.6 14.8 1.15 1.27 1.31
FB 162 82 NEU 102 54 60 68 18.4 14.7 10.8 1.52 1.37 1.21 8.3 8.7 11.0 0.69 0.73 0.85
CUB 124 187 BUY 231 55 66 77 21.0 18.0 15.4 3.36 2.83 2.43 15.3 15.4 15.4 1.57 1.60 1.57
KVB 72 99 BUY 156 61 70 78 20.8 14.5 8.0 1.64 1.41 1.27 6.1 7.8 13.6 0.54 0.70 1.14
DCBB 52 169 BUY 216 78 88 98 21.2 16.4 13.3 2.16 1.92 1.72 9.8 10.8 12.0 0.90 0.95 0.97
SFB
AU SFB 192 639 NEU 673 73 117 135 62.5 43.0 32.6 8.72 5.48 4.75 13.8 15.0 14.9 1.98 1.98 1.96
NBFCs
MMFS # 282 459 BUY 590 119 142 163 30.4 18.8 15.9 3.70 3.11 2.70 11.3 14.8 15.7 1.78 2.45 2.44
SHTF 261 1,152 BUY 1,679 460 556 672 16.7 11.2 9.2 2.50 2.07 1.72 13.1 17.3 18.3 1.93 2.48 2.60
LICHF 240 476 BUY 636 237 275 318 12.1 10.1 8.5 2.00 1.73 1.50 16.7 17.4 17.8 1.23 1.29 1.33
CIFC 234 1,494 BUY 1,767 284 354 443 24.0 18.6 15.3 5.26 4.22 3.37 20.6 22.0 22.2 2.77 2.88 2.93
SCUF 128 1,940 BUY 2,274 702 849 1,011 19.3 14.5 11.3 2.77 2.28 1.92 12.5 14.8 16.7 2.48 2.73 2.98
REPCO 36 575 BUY 683 192 232 273 17.5 14.4 12.5 2.99 2.48 2.10 16.7 17.3 17.0 2.17 2.30 2.25
15
FINANCIALS : 1QFY19E RESULTS PREVIEW
Peer Valuation
Bloomberg Ticker IPRU MAXF SBILIFE
Rating BUY BUY BUY
Current market price Rs 367 420 665
Market Capitalisation Rs bn 527 112 665
Target price Rs 481 567 870
Upside/(Downside) % 31 35 31
Particulars IPRU FY18
IPRU FY19E
IPRU FY20E
MAXF FY18
MAXF FY19E
MAXF FY20E
SBILIFE FY18
SBILIFE FY19E
SBILIFE FY20E
Profitablity
VNB Margin % 16.5 17.0 17.3 20.2 20.4 20.6 16.3 16.5 16.7
Total RoEV % 23.4 17.6 18.0 19.0 20.0 20.0 16.7 19.4 19.4
Operating RoEV % 22.7 17.6 18.0 19.7 20.0 20.0 17.8 19.4 19.4
Non-operating RoEV % 0.7 0.0 0.0 -0.7 0.0 0.0 -1.1 0.0 0.0
RoE % 27.9 23.4 21.0 24.1 26.5 25.0 19.4 19.0 19.8
Valuation at CMP
P/EV x 2.8 2.5 2.2 2.2 1.9 1.6 3.5 2.9 2.5
P/EVOP x 14.3 15.9 13.8 12.4 10.8 9.3 22.5 17.9 15.2
Implied P/VNB x 26.4 20.8 15.7 13.2 10.0 6.9 34.1 25.9 19.4
Implied P/VIF x 4.5 3.9 3.4 3.2 2.8 2.4 5.7 5.0 4.3
P/B x 8.0 7.1 6.4 5.6 4.7 3.9 10.4 8.9 7.6
P/E x 32.4 32.3 32.1 27.2 20.4 18.5 57.8 50.5 41.4
P/AUM x 0.4 0.3 0.3 0.3 0.3 0.2 0.6 0.5 0.4
Valuation at TP
P/EV x 3.7 3.2 2.8 2.9 2.5 2.2 4.5 3.8 3.3
P/EVOP x 18.8 20.9 18.0 16.7 14.6 12.6 29.5 23.4 19.8
Implied P/VNB x 39.1 31.6 24.7 21.8 17.5 13.3 48.8 38.0 29.4
Implied P/VIF x 5.9 5.2 4.5 3.0 2.6 2.3 7.5 6.5 5.6
P/B x 10.5 9.3 8.4 7.5 6.3 5.3 13.6 11.7 9.9
P/E x 42.5 42.3 42.1 36.7 27.5 24.9 75.6 66.1 54.2
P/AUM x 0.5 0.4 0.4 0.2 0.2 0.1 0.7 0.6 0.5
16
FINANCIALS : 1QFY19E RESULTS PREVIEW
Peer Valuation
Particulars IPRU FY18
IPRU FY19E
IPRU FY20E
MAXF FY18
MAXF FY19E
MAXF FY20E
SBILIFE FY18
SBILIFE FY19E
SBILIFE FY20E
Per Share data
EV Rs 131 148 169 194 225 262 191 226 267
EVOP Rs 26 23 27 34 39 45 30 37 44
VNB Rs 9 11 13 17 20 23 14 17 21
VIF Rs 82 93 107 131 151 173 116 134 155
Book Value Rs 46 51 57 76 90 106 64 75 88
Earnings Rs 11 11 11 15 21 23 12 13 16
AUM Rs 972 1,120 1,303 1,362 1,645 1,909 1,163 1,395 1,704
ANW Rs 49 55 63 90 106 126 75 92 111
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FINANCIALS : 1QFY19E RESULTS PREVIEW
Peer Valuation
Particulars IPRU FY18
IPRU FY19E
IPRU FY20E
MAXF FY18
MAXF FY19E
MAXF FY20E
SBILIFE FY18
SBILIFE FY19E
SBILIFE FY20E
Key parameters
APE Rs bn 78 89 105 32 37 43 85 102 123
VNB Rs bn 13 15 18 7 7 9 14 17 21
Total EVOP Rs bn 37 33 38 13 15 17 30 37 44
Operating EVOP Rs bn 37 33 38 13 15 17 30 37 44
Non- operating EVOP Rs bn 1 0 0 (0) 0 0 (2) 0 0
EV Rs bn 188 213 243 74 86 100 191.4 226.3 267.3
Net worth Rs bn 66 74 82 29 35 41 64 75 88
Net Profit Rs bn 16 16 16 6 8 9 12 13 16
AUM 1,395 1,607 1,870 522 631 732 1,163 1,395 1,704
Growth YOY
APE % 17.6 14.0 18.0 18.2 13.0 16.0 29.3 20.0 20.0
VNB % 93.1 17.4 20.1 31.5 14.1 16.9 34.1 21.8 21.1
Total EVOP % 60.3 (10.1) 15.6 15.9 15.0 15.9 2.2 26.0 18.1
Operating EVOP % 60.3 (10.1) 15.6 15.9 15.0 15.9 2.2 26.0 18.1
Non- operating EVOP % (80.8) (100.0) NM (127.5) (100.0) NM (114.0) (100.0) NM
EV % 16.1 13.3 14.1 13.0 15.9 16.3 15.5 18.2 18.2
Net worth % 7.2 12.4 11.1 15.8 19.1 18.1 16.6 17.1 17.8
Net Profit % (5.0) 0.5 0.4 (10.3) 33.4 10.6 20.5 14.4 21.9
AUM % 13.5 15.2 16.4 17.7 20.7 16.1 19.0 19.9 22.1
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FINANCIALS : 1QFY19E RESULTS PREVIEW
Rating Definitions
BUY : Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-) 10% to 10% returns over the next 12 month period
SELL : Where the stock is expected to deliver less than (-) 10% returns over the next 12 month period
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FINANCIALS : 1QFY19E RESULTS PREVIEW
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