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HOLD GRUH Finance continued with its strong growth in disbursements and loan book
which grew by 70.6% and 25% respectively on a YoY basis. However Net Interest
Market Data Income (NII) has declined by 6.77% sequentially and 4.07% on YoY basis mainly due
Current Market Price (INR) 412 to contraction in net interest margin.
Target Price (INR) 450
Growth in loan portfolio remains strong
Upside Potential ~ 9%
52 Week High / Low (INR) 449/190 GRUH s loan book grew by 25% YoY backed by a strong growth in disbursements
GRUH’s
Market Capitalization (In INR Mn) 14312 which grew by 70.6% YoY and 26% QoQ.
During this quarter, GRUH’s NIMs has declined by 45bps to 3.65% on the back of
Individual higher bank borrowing cost and lower yields on incremental lending. The monetary
26.6% tightening has led to an increase in the cost of funds, which has gone up from 8.1% as
Promoter
&
& on Q1
Q1’11
11 to 8.54%
8 54% as on Q2
Q2’11
11. We are expecting a NIM of 3.59%
3 59% for FY11 and 3.41%
3 41%
Promoter
group
for FY12.
Corporate
bodies 61.4%
2% Overall Asset Quality remains strong, however deteriorates on QoQ basis
Institutions
10% The Gross NPA has declined by 15.5% on a YoY basis and currently stood at INR 374.3
Mn which is 1.37% of the total loan portfolio. GRUH continues to maintain excess
STOCK SCAN provisions resulting in zero net-NPA position for the company as on Q2’11. However
BSE Code 511288 there has been an increase in absolute GNPA on a sequential basis due to increased
NSE Code GRUH focus on non-salaried segment which results into asset quality deterioration.
Bloomberg Ticker GRHF.IN
Valuation
Reuters Ticker GRUH.BO
GRUH is currently trading at a PEx of 14.01 & P/BVx of 3.4 based on the FY12
Face Value (INR) 10
expected earnings. We assigned it a target price of INR 450, which is 3.7 times its FY12
Equity Share Capital (INR. Mn.) 347.3 expected book value. We recommend a “HOLD” for GRUH, mainly because of its
Average P/E/PBV 12.98/2.92 recent run up and stretched valuation.
Beta vs Sensex 0 81
0.81
Average Daily Volumes (6 M) 78540
Particulars (in
Dividend Yield (%) 1.56 Mn) 2008 2009 2010 2011E 2012E
Stock Return (1 Yr) 111.8% Total Income 807.00 930.00 1,281.00 1,640.32 2,016.04
120.0 Growth 38.4% 15.2% 37.7% 28.0% 22.9%
100.0 NII 670.00 606.00 956.00 1,160.97 1,398.70
80.0 Growth% 66% -9.6% 57.8% 21.4% 20.5%
60.0
Net Profit 410.00 493.00 647.00 832.12 1,020.24
40.0
Growth% 46.4% 20.2% 31.2% 28.6% 22.6%
20.0
EPS 11.82 14.21 18.65 23.98 29.40
0.0
‐20.0 P/E 34.87 29.00 22.10 17.18 14.01
NIM% 3.32% 2.40% 3.60% 3.59% 3.41%
ROE 23.90% 22.30% 24.50% 24.30% 24.20%
Gruh Finance Ltd close
Gruh Finance Ltd.close SENSEX GNPA% 1 12
1.12 0 94
0.94 1 10
1.10 1 12
1.12 1 12
1.12
NNPA% 0 0 0 0 0
Analyst: Abhisek Sasmal BV 54.97 63.66 76.25 96.64 121.63
Email: asasmal@microsec.in P/BV 7.49 6.47 5.40 4.26 3.39
Ph No: 033-3051-2100 Source: Company, Microsec Research
K lk t
Kolkata
Investment Banking
Azimganj House, 2nd Floor
7, Camac Street, Kolkata – 700 017, India
Tel: 91 33 2282 9330, Fax: 91 33 2282 9335
Mumbai
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