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Stocks are usually traded OTC because of many reasons, most common is, the company is small and cannot meet exchange listing requirements or the company promoters plan to liquidate there holding at an opportune time when they need money to scaleup the business. Reasons can by many others as well. Also known as unlisted stock, these securities are traded by broker-dealers, who negotiate directly with one another over computer networks and by phone.
Consolidated loan book
break-up (Rs. mn) | FY19 | % contribution |
Retail
(including 2-Wheelers) | 77,040 | 39.0% |
- 2-Wheeler loans | 59,710 | 30.3% |
SME
(Including LAP) | 59,320 | 30.1% |
Emerging
Corporate loans | 60,560 | 30.7% |
Others | 440 | 0.2% |
Total | 197,360 | 100.0% |
Particulars | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | 3 yr CAGR | 5 yr CAGR |
Consolidated Loan Book (Rs.
mn) | 8,782 | 30,140 | 63,146 | 96,506 | 131,581 | 197,712 | 46.3% | 86.4% |
Category | % shareholding |
Hero Moto Corp | 41.2% |
Munjal
Family | 38.7% |
Credit Suisse | 2.4% |
Otter Ltd. | 10.6% |
Others | 7.2% |
Total | 100.0% |
Management Team | Designation | With HFCL since | Brief Profile and Prior Experience | Qualification |
Mr. Abhimanyu
Munjal | Joint MD and CEO | 2013 | - Mr. Abhimanyu has over 15 years of experience in
strategic leadership and people management and has held various executive
positions in Hero Group companies. He has been instrumental in expanding
HFCL’s AUM. - He has also set up a VC Fund called AdvantEdge
Partners and made investments in 18 startups. | N.A. |
Mrs. Renu Munjal | Managing Director | Inception | -
Mrs. Renu Munjal is the Managing Director of Hero FinCorp. She also serves as a director on the Board
of Easy Bill. She is the former Executive Director of Hero MotoCorp. | N.A. |
Mr. Pawan Munjal | Chairman and Director | Inception | - Mr. Pawan Munjal is the Chairman, Managing
Director and CEO of Hero Motocorp Ltd. - Under his leadership, Hero Moto has become the
world’s largest two-wheeler company in the world. - He has been a prominent member of several industry
bodies and has regularly contributed to policymaking in India. | N.A. |
Mr. Jayesh Jain | Chief Financial Officer | 2018 | - Mr. Jayesh has over 17 years of experience across
strategic planning, budgeting, accounting, auditing, etc. - He has previously worked with PNB Housing and Gruh
Finance as their CFO. | - Chartered Accountant - CFA |
Mr. Ajay Sahasrabuddhe | CEO – Retail Finance | 2013 | - Mr. Ajay has more than 25 years of experience in
retail financing. - He has previously worked as Chief
Business Officer with Family Credit and as National Sales Manager at Tata Capital. | - Diploma in business
management from Amravati University |
Mr. Mahesh
Sanghavi | Chief Business Officer | 2015 | - Mr. Mahesh has more than 20 years of experience in
credit risk management with expertise in underwriting, portfolio and stressed
asset management. - Prior to joining HFCL, he was the head of credit
risk at ING Vysya Bank and has also worked with HSBC, ICICI Bank, IndusInd Bank. | - CWA - MBA from INSEAD - CFA |
Mr. Samir Mehta | Chief Business Officer | 2014 | - Mr. Samir has over 18 years of experience in
setting up and managing SME and MME asset businesses. - He joined Hero Fincorp as Business Head – Corporate
Finance in 2014. | - B Tech. from
NIT, Kurukshetra - MBA from IIM Lucknow |
Particulars | FY15 | FY16 | FY17 | FY18 | FY19 |
HMCL
two-wheeler sales (no.) | 6,431,686 | 6,421,913 | 6,483,655 | 7,382,718 | 7,612,775 |
HFCL
financing volumes (no.) | 226,000 | 468,000 | 670,000 | 860,000 | 1,200,000 |
%
contribution | 4% | 7% | 10% | 12% | 16% |
Loan book mix % | FY15 | FY16 | FY17 | FY18 | FY19 |
Retail
(including 2 wheelers) | 26.5% | 28.4% | 30.9% | 32.4% | 39.0% |
SME
(including LAP) | 29.0% | 32.4% | 36.4% | 36.1% | 30.1% |
Emerging
Corporate | 42.5% | 38.1% | 32.0% | 31.0% | 30.7% |
Others | 1.9% | 1.1% | 0.7% | 0.5% | 0.2% |
Total | 100% | 100% | 100% | 100% | 100% |
Asset quality | FY15 | FY16 | FY17 | FY18 | FY19 |
GNPA % | 0.30% | 1.60% | 3.40% | 4.10% | 4.50% |
NNPA % | 0.14% | 0.55% | 1.72% | 2.72% | 2.97% |
Credit
cost % | 0.3% | 0.6% | 0.9% | 1.0% | 0.7% |
Slippages
(Rs. mn) | 44 | 553 | 2,428 | 3,883 | 4,407 |
Key parameters (Rs. mn) | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | FY16-19 CAGR | FY14-19 CAGR |
Balance Sheet: | | | | | | | | |
Loan Book | 8,782 | 30,140 | 63,146 | 96,506 | 131,581 | 197,712 | 46.3% | 86.4% |
YoY growth % | 40% | 243% | 110% | 53% | 36% | 50% | | |
Net worth | 2,175 | 5,514 | 10,302 | 19,187 | 22,485 | 36,419 | 52.3% | 75.7% |
YoY growth % | 4% | 154% | 87% | 86% | 17% | 62% | | |
Profit & Loss: | | | | | | | | |
Net Interest
Income | 601 | 1,344 | 3,375 | 5,831 | 8,502 | 11,212 | 49.2% | 79.5% |
YoY growth % | 59% | 124% | 151% | 73% | 46% | 32% | | |
NIMs on loans % | 6.8% | 4.5% | 5.3% | 6.0% | 6.5% | 5.7% | 6.1% | 5.6% |
Total
income | 801 | 2,000 | 4,790 | 7,975 | 10,109 | 13,938 | 42.8% | 77.1% |
YoY growth % | 71% | 150% | 139% | 66% | 27% | 38% | | |
Cost
to Income Ratio % | 71.1% | 71.0% | 66.5% | 63.9% | 65.5% | 62.0% | Avg. 63.8% | Avg. 65.8% |
PPOP | 231 | 581 | 1,603 | 2,875 | 3,485 | 5,292 | 48.9% | 87.0% |
YoY growth % | -18% | 151% | 176% | 79% | 21% | 52% | | |
Provisions | 3 | 79 | 355 | 884 | 1,362 | 1,381 | 57.3% | 240.9% |
Credit Cost % | 0.03% | 0.26% | 0.56% | 0.92% | 1.03% | 0.70% | Avg. 0.9% | Avg. 0.7% |
ETR
% | 34.4% | 34.0% | 34.7% | 35.1% | 32.7% | 37.2% | Avg. 35.0% | Avg. 34.7% |
PAT | 150 | 332 | 815 | 1,292 | 1,429 | 2,458 | 44.5% | 75.0% |
YoY growth % | -21% | 121% | 146% | 59% | 11% | 72% | | |
Ratios: | | | | | | | | |
EPS (Rs.) | 1.3 | 2.9 | 7.1 | 11.3 | 12.5 | 21.5 | 44.5% | 75.0% |
BV
(Rs.) | 19 | 48 | 90 | 168 | 197 | 319 | 52.3% | 75.7% |
RoA (%) | 1.3% | 1.1% | 1.2% | 1.3% | 1.1% | 1.2% | Avg. 1.2% | Avg. 1.2% |
RoE
(%) | 6.9% | 6.0% | 7.9% | 6.7% | 6.4% | 6.7% | Avg. 6.6% | Avg. 6.8% |
Leverage (xs) | 5.4 | 5.7 | 6.3 | 5.2 | 6.0 | 5.8 | Avg. 5.7 | Avg. 5.8 |
Parameter | Commentary on historical performance |
Loan Book – CAGR | § Company has presence in in both retail and
corporate segments. It is increasingly diversifying its loan book by entering
two-wheeler financing, LAP, SME loans, housing finance. Loan book has grown
at a strong rate of 46% in the past 3 years (86% in 5 yrs). |
NII– CAGR NIMs | § NII growth has largely been in line with loan book
growth at 49% and 79% in the last 3 and 5 years, respectively. NIMs have
declined from 6.8% in FY14 to 5.7% in FY19 as cost of funds has risen even as
yields have been maintained. |
Cost to Income
(C/I) ratio | § CI ratio has been consistently declining from 71% in FY14 to 62% in FY19, reflecting productivity improvement. |
Credit Cost -
Avg/ Provisions | § Since HFCL has recently
diversified its loan book and the book is yet to season, credit cost is lower
with an average 0.9% in the past 3 years and 0.7% in past 5 years. GNPA has,
however, been rising from 0.3% in FY15 to 4.5% in FY19. |
PAT
- CAGR | § PAT has grown at a CAGR of 45% in
the last 3 years (75% in 5 yrs) driven by strong loan book growth, stable
NIMs and operating efficiency. |
Return
Metrics | § Strong growth in profits has resulted in RoA of
1.2% (3 yr average). RoE at 6.6% has been lower due to equity infusion done
to maintain leverage in the range of 5-6-xs. |
Company Name(Rs. mn) | Net interest income | Loan book | PAT | ||||||
FY18 | FY19 | YoY Growth | FY18 | FY19 | YoY Growth | FY18 | FY19 | YoY Growth | |
Hero Fincorp | 8,502 | 11,212 | 32% | 131,581 | 197,712 | 50% | 1,429 | 2,458 | 72% |
Bajaj Finance | 69,716 | 97,252 | 39% | 791,030 | 1,125,130 | 42% | 24,964 | 39,950 | 60% |
L&T Finance | 44,292 | 51,052 | 15% | 853,540 | 991,210 | 16% | 12,784 | 22,320 | 75% |
Chola | 28,174 | 33,973 | 21% | 422,530 | 526,220 | 25% | 9,183 | 11,862 | 29% |
MMFS | 35,287 | 47,004 | 33% | 485,470 | 612,496 | 26% | 10,761 | 15,571 | 45% |
Shriram
transport | 68,350 | 78,976 | 16% | 961,984 | 1,023,075 | 6% | 24,603 | 25,587 | 4% |
Company Name(Rs. mn) | CI Ratio | NIM | Credit Cost | ROA | ROE | |||||
FY18 | FY19 | FY18 | FY19 | FY18 | FY19 | FY18 | FY19 | FY18 | FY19 | |
Hero
Fincorp | 66% | 62% | 6.5% | 5.7% | 1.0% | 0.7% | 1.1% | 1.2% | 6.4% | 6.7% |
Bajaj
Finance | 40% | 35% | 8.8% | 8.6% | 1.3% | 1.3% | 2.9% | 3.2% | 15.8% | 20.3% |
L&T Finance | 29% | 30% | 5.8% | 6.5% | 2.4% | 1.5% | 1.5% | 2.1% | 11.2% | 16.6% |
Chola | 39% | 37% | 6.7% | 6.5% | 0.8% | 0.6% | 2.1% | 2.1% | 18.0% | 19.2% |
MMFS | 40% | 38% | 7.3% | 7.7% | 1.2% | 1.0% | 2.0% | 2.3% | 11.2% | 14.3% |
Shriram
transport | 23% | 23% | 7.1% | 7.7% | 1.8% | 2.3% | 2.5% | 2.4% | 20.3% | 16.2% |
1 | Bajaj Finance Ltd. | 52 week High (Rs.) | 52 week Low (Rs.) | March ending
price (Rs.) | EPS
(Rs.) | BV
(Rs.) | P/E (xs) | P/BV
(xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 448 | 167 | 410 | 15.5 | 83 | 28.9 | 10.8 | 26.5 | 5.4 | 2.0 | 4.9 |
| FY16 | 698 | 394 | 693 | 22.0 | 128 | 31.7 | 17.9 | 31.4 | 5.5 | 3.1 | 5.4 |
| FY17 | 1,205 | 677 | 1,174 | 31.7 | 155 | 38.0 | 21.4 | 37.1 | 7.8 | 4.4 | 7.6 |
| FY18 | 1,989 | 1,153 | 1,770 | 43.0 | 273 | 46.2 | 26.8 | 41.1 | 7.3 | 4.2 | 6.5 |
| FY19 | 3,035 | 1,770 | 3,025 | 68.9 | 340 | 44.1 | 25.7 | 43.9 | 8.9 | 5.2 | 8.9 |
| 5 yrAvg | | | | | | 37.8 | 20.5 | 36.0 | 7.0 | 3.8 | 6.7 |
2 | Chola | 52
week High (Rs.) | 52
week Low (Rs.) | March
ending price (Rs.) | EPS (Rs.) | BV (Rs.) | P/E (xs) | P/BV (xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 123 | 56 | 118 | 5.6 | 41 | 22.2 | 10.0 | 21.1 | 3.0 | 1.4 | 2.9 |
| FY16 | 151 | 108 | 143 | 7.3 | 47 | 20.8 | 14.9 | 19.6 | 3.2 | 2.3 | 3.1 |
| FY17 | 249 | 139 | 193 | 9.2 | 55 | 27.1 | 15.2 | 21.0 | 4.5 | 2.5 | 3.5 |
| FY18 | 302 | 193 | 290 | 11.7 | 65 | 25.7 | 16.4 | 24.7 | 4.6 | 3.0 | 4.4 |
| FY19 | 352 | 208 | 290 | 15.2 | 79 | 23.2 | 13.7 | 19.1 | 4.5 | 2.6 | 3.7 |
| 5 yrAvg | | | | | | 23.8 | 14.0 | 21.1 | 4.0 | 2.4 | 3.5 |
3 | L&T Finance | 52 week High (Rs.) | 52 week Low (Rs.) | March ending price (Rs.) | EPS (Rs.) | BV (Rs.) | P/E (xs) | P/BV (xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 83 | 60 | 63 | 4.1 | 31 | 20.3 | 14.6 | 15.4 | 2.7 | 2.0 | 2.1 |
| FY16 | 75 | 48 | 64 | 4.1 | 33 | 18.2 | 11.8 | 15.5 | 2.3 | 1.5 | 1.9 |
| FY17 | 124 | 64 | 123 | 5.0 | 33 | 24.9 | 12.7 | 24.8 | 3.7 | 1.9 | 3.7 |
| FY18 | 214 | 119 | 157 | 6.1 | 55 | 34.9 | 19.5 | 25.7 | 3.9 | 2.2 | 2.9 |
| FY19 | 190 | 111 | 152 | 10.7 | 64 | 17.7 | 10.4 | 14.3 | 2.9 | 1.7 | 2.4 |
| 5 yrAvg | | | | | | 23.2 | 13.8 | 19.1 | 3.1 | 1.8 | 2.6 |
4 | Mahindra Finance | 52 week High (Rs.) | 52 week Low (Rs.) | March
ending price (Rs.) | EPS (Rs.) | BV (Rs.) | P/E (xs) | P/BV (xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 345 | 230 | 254 | 13.5 | 92 | 25.6 | 17.0 | 18.8 | 3.8 | 2.5 | 2.8 |
| FY16 | 294 | 173 | 243 | 10.9 | 99 | 27.0 | 15.9 | 22.3 | 3.0 | 1.8 | 2.5 |
| FY17 | 405 | 232 | 315 | 6.5 | 105 | 23.3 | 35.8 | 48.6 | 3.9 | 2.2 | 3.0 |
| FY18 | 524 | 290 | 462 | 17.4 | 156 | 30.1 | 16.7 | 26.5 | 3.4 | 1.9 | 3.0 |
| FY19 | 538 | 351 | 421 | 25.2 | 177 | 21.3 | 13.9 | 16.7 | 3.0 | 2.0 | 2.4 |
| 5 yr Avg | | | | | | 25.5 | 19.9 | 26.6 | 3.4 | 2.1 | 2.7 |
5 | Shriram Transport | 52 week High (Rs.) | 52 week Low (Rs.) | March ending price (Rs.) | EPS
(Rs.) | BV
(Rs.) | P/E (xs) | P/BV
(xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 1,286 | 697 | 1,114 | 54.6 | 407 | 23.6 | 12.8 | 20.4 | 3.2 | 1.7 | 2.7 |
| FY16 | 1,206 | 737 | 954 | 51.9 | 448 | 23.2 | 14.2 | 18.4 | 2.7 | 1.6 | 2.1 |
| FY17 | 1,325 | 778 | 1,078 | 55.4 | 425 | 23.9 | 14.0 | 19.4 | 3.1 | 1.8 | 2.5 |
| FY18 | 1,543 | 898 | 1,441 | 108.4 | 440 | 14.2 | 8.3 | 13.3 | 3.5 | 2.0 | 3.3 |
| FY19 | 1,671 | 904 | 1,273 | 112.8 | 607 | 14.8 | 8.0 | 11.3 | 2.8 | 1.5 | 2.1 |
| 5 yr Avg | | | | | | 20.0 | 11.5 | 16.6 | 3.0 | 1.7 | 2.6 |
Revenue break up | FY19 (Rs. mn) | % contribution |
Lending business | 67,121 | 77% |
BPO services | 16,481 | 19% |
Other income
(inc. distribution income from insurance, treasury and fee income) | 3,646 | 4% |
Total | 87,248 | 100% |
Loan Book break up | FY19 (Rs. mn) | % contribution |
Loan Against
Property (LAP) | 191,483 | 35% |
Vehicle
Finance | 224,309 | 41% |
Unsecured
Business Loans | 114,890 | 21% |
Other retail
loans | 16,413 | 3% |
Total | 547,094 | 100% |
Particulars
FY14
FY15
FY16
FY17
FY18
FY19
3 yr CAGR
5 yr CAGR
Loan Book (Rs. mn)
133,875
189,891
244,096
340,709
442,683
547,094
31%
32%
Management Team | Designation | With HDB since | Brief Profile and Prior Experience | Qualification |
Mr. Aditya Puri | Chairman and Non- Executive Director | Inception | - Mr. Puri is the MD and CEO of
HDFC Bank since its inception. He has more than 4 decades of experience in
the banking industry. - Prior to setting up HDFC Bank, he was the CEO of
Citi Bank. | - Chartered Accountant |
Mr. Ramesh G | Managing Director & CEO | Inception | - Mr. Ramesh has more than 2 decades of experience in the industry. He was working as a VP with HDFC Bank Ltd. - He has previously worked as COO with Intelenet
Global Services. | - BE from Annamalai University PGDM from IIM Lucknow |
Mr.
Bhavesh Zaveri | Non-Executive Director | N.A. | - Mr. Bhavesh is the Head of
Operations & Technology at HDFC Bank Ltd. and has more than 2 decades of experience in the
banking industry. - He is also on the board of The Clearing Corp. of
India Ltd., HDB Financial Services Ltd. and National Payments Corp. of India
Ltd. and Associate for Indian Institute of Banking & Finance. He
has also worked as Principal at Barclays Bank. | - M Com. from University of Mumbai - Certified Associate of the Indian Institute of Bankers. |
Mr. Jimmy Tata | Non-Executive Director | N.A. | - Mr. Jimmy has more than 3 decades of experience in the banking industry and
works as Chief Risk Officer in HDFC Bank. - He also serves on the board of International Asset
Reconstruction Co. Pvt Ltd. | - MBA from JBIMS - CFA from ICFAI |
Particulars (Rs. mn) | FY13 | FY16 | FY19 | 3 yr CAGR |
LAP | 46,351 | 146,458 | 191,483 | 9.3% |
% contribution to loan | 57% | 60% | 35% | |
Vehicle Finance | 24,447 | 51,260 | 224,309 | 63.6% |
% contribution to loan | 30% | 21% | 41% | |
Unsecured
Business Loans | 8,860 | 36,614 | 114,890 | 46.4% |
% contribution to loan | 11% | 15% | 21% | |
Other retail
loans | 2,379 | 9,764 | 16,413 | 18.9% |
% contribution to loan | 3% | 4% | 3% | |
Total | 82,037 | 244,096 | 547,094 | |
Key parameters (Rs. mn) | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | FY16-19 CAGR | FY14-19 CAGR |
Balance Sheet: | | | | | | | | |
Loan Book | 133,875 | 189,891 | 244,096 | 340,709 | 442,683 | 547,094 | 30.9% | 32.5% |
YoY growth % | 63% | 42% | 29% | 40% | 30% | 24% | | |
Net worth | 16,285 | 31,251 | 35,618 | 52,089 | 60,404 | 71,785 | 26.3% | 34.5% |
YoY growth % | 86% | 92% | 14% | 46% | 16% | 19% | | |
Profit & Loss: | | | | | | | | |
NII | 5,907 | 9,288 | 14,445 | 20,372 | 28,822 | 33,788 | 32.7% | 41.7% |
YoY growth % | 89% | 57% | 56% | 41% | 41% | 17% | | |
NIMs on loans % | 4.4% | 4.9% | 5.9% | 6.0% | 6.5% | 6.2% | Avg.
6.2% | Avg. 5.9% |
Other income | 2,067 | 2,511 | 2,860 | 16,243 | 16,958 | 20,127 | 91.6% | 57.6% |
- Income from BPO services | 664 | 743 | 799 | 13,291 | 15,290 | 16,481 | 174.3% | 90.1% |
-Other income
(inc. insurance distribution, treasury and fee income) | 1,404 | 1,768 | 2,062 | 2,952 | 1,668 | 3,646 | 20.9% | 21.0% |
Total income | 7,975 | 11,800 | 17,305 | 36,614 | 45,781 | 53,915 | 46.1% | 46.6% |
YoY growth % | 77% | 48% | 47% | 112% | 25% | 18% | | |
Cost to Income
Ratio % | 44.3% | 40.5% | 41.5% | 61.9% | 57.2% | 56.2% | Avg.
58.4% | Avg. 51.5% |
PPOP | 4,439 | 7,019 | 10,121 | 13,950 | 19,609 | 23,610 | 32.6% | 39.7% |
YoY growth % | 109% | 58% | 44% | 38% | 41% | 20% | | |
Provisions | 1,259 | 1,717 | 1,942 | 3,396 | 5,248 | 6,369 | 48.6% | 38.3% |
Credit Cost % | 0.94% | 0.90% | 0.80% | 1.00% | 1.19% | 1.16% | Avg.
1.1% | Avg. 1.0% |
ETR % | 34.2% | 34.1% | 34.7% | 35.5% | 35.0% | 33.1% | Avg.
34.5% | Avg. 34.5% |
PAT | 2,092 | 3,495 | 5,344 | 6,810 | 9,330 | 11,532 | 29.2% | 40.7% |
YoY growth % | 104% | 67% | 53% | 27% | 37% | 24% | | |
Ratios: | | | | | | | | |
EPS (Rs.) | 2.7 | 4.4 | 6.8 | 8.7 | 11.9 | 14.7 | 29.2% | 40.7% |
BV (Rs.) | 21 | 40 | 45 | 66 | 77 | 91 | 26.3% | 34.5% |
GNPA % | 0.81% | 0.84% | 1.23% | 1.89% | 1.67% | 1.83% | | |
NNPA % | 0.42% | 0.48% | 0.73% | 0.84% | 1.12% | 1.24% | | |
RoA (%) | 1.5% | 1.8% | 2.1% | 1.9% | 2.1% | 2.0% | Avg.
2.0% | Avg. 2.0% |
RoE (%) | 12.8% | 11.2% | 15.0% | 13.1% | 15.4% | 16.1% | Avg.
14.9% | Avg. 14.2% |
Leverage (xs) | 8.4 | 6.3 | 7.1 | 6.8 | 7.5 | 7.9 | Avg.
7.4 | Avg. 7.1 |
Parameter | Commentary on historical performance |
Loan Book – CAGR | § Company has
presence in 4 key segments, where vehicle financing and LAP constitute
majority of the book (approx. 75%). Loan book has grown at a strong rate of
31% in the past 3 years (33% in 5 yrs). Company is also venturing into other
retail loans like gold loan, digital products loan, loans for appliances,
personal loans, etc. |
NII– CAGR NIMs | § NII growth has been higher than loan book growth at 33% and 42% in the last 3 and 5 years, respectively as NIMs have expanded from 4.4% in FY14 to
6.2% in FY19. NIM expansion is mainly because of change in product mix
towards vehicle financing and unsecured business loans. Share of LAP has come down from 60% in FY16 to 35%
in FY19, while share of vehicle finance and unsecured BL has increased to 62%
from 36% in FY16. |
BPO income | § Income from this
business contributed 19% to the revenue in FY19 from 2% in FY16. Growth was
higher post FY17 due to merger with HBL and ADFC. |
Parameter | Commentary on historical performance |
Cost to Income
(C/I) ratio | § CI ratio was in
line with industry peers till FY17. However, due to merger with ADFC and
HBL’s BPO business, employee count increased significantly leading to higher operating expenses. However, it has been declining since FY17,
reflecting productivity improvement. |
Credit Cost -
Avg/ Provisions | § Asset quality
has witnessed some deterioration in the recent past due to stress in the
vehicle finance business. Provisions have grown at 49% in the past 3 years
(38% in 5 yrs). However, overall GNPA remains much better than peers. |
PAT - CAGR | § PAT has grown at
a CAGR of 29% in the last 3 years (41% in 5 yrs) driven by strong loan book
growth, NIM expansion and operating efficiency. |
Return Metrics | § Return metrics have consistently shown improvement over the years with average RoA of 2.0% and RoE of 14.2% in the last 5 years. |
Company Name (Rs. mn) | Net interest income | Loan book | PAT | ||||||
FY18 | FY19 | YoY Growth | FY18 | FY19 | YoY Growth | FY18 | FY19 | YoY Growth | |
HDB
Financial | 28,822 | 33,788 | 17% | 442,683 | 547,094 | 24% | 9,330 | 11,532 | 24% |
Bajaj
Finance | 69,716 | 97,252 | 39% | 791,030 | 1,125,130 | 42% | 24,964 | 39,950 | 60% |
L&T Finance | 44,292 | 51,052 | 15% | 853,540 | 991,210 | 16% | 12,784 | 22,320 | 75% |
Chola | 28,174 | 33,973 | 21% | 422,530 | 526,220 | 25% | 9,183 | 11,862 | 29% |
MMFS | 35,287 | 47,004 | 33% | 485,470 | 612,496 | 26% | 10,761 | 15,571 | 45% |
Shriram
transport | 68,350 | 78,976 | 16% | 961,984 | 1,023,075 | 6% | 24,603 | 25,587 | 4% |
Company Name (Rs. mn) | CI Ratio | NIM | Credit Cost | GNPA | ROA | ROE | ||||||
FY18 | FY19 | FY18 | FY19 | FY18 | FY19 | FY18 | FY19 | FY18 | FY19 | FY18 | FY19 | |
HDB
Financial | 57% | 56% | 6.5% | 6.2% | 1.2% | 1.2% | 1.7% | 1.8% | 2.1% | 2.0% | 15.4% | 16.1% |
Bajaj Finance | 40% | 35% | 8.8% | 8.6% | 1.3% | 1.3% | 1.4% | 1.5% | 2.9% | 3.2% | 15.8% | 20.3% |
L&T
Finance | 29% | 30% | 5.8% | 6.5% | 2.4% | 1.5% | 8.3% | 5.6% | 1.5% | 2.1% | 11.2% | 16.6% |
Chola | 39% | 37% | 6.7% | 6.5% | 0.8% | 0.6% | 3.1% | 2.4% | 2.1% | 2.1% | 18.0% | 19.2% |
MMFS | 40% | 38% | 7.3% | 7.7% | 1.2% | 1.0% | 10.4% | 6.6% | 2.0% | 2.3% | 11.2% | 14.3% |
Shriram
transport | 23% | 23% | 7.1% | 7.7% | 1.8% | 2.3% | 7.7% | 6.9% | 2.5% | 2.4% | 20.3% | 16.2% |
1 | Bajaj
Finance Ltd. | 52 week High (Rs.) | 52 week Low (Rs.) | March
ending price (Rs.) | EPS (Rs.) | BV (Rs.) | P/E (xs) | P/BV (xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 448 | 167 | 410 | 15.5 | 83 | 28.9 | 10.8 | 26.5 | 5.4 | 2.0 | 4.9 |
| FY16 | 698 | 394 | 693 | 22.0 | 128 | 31.7 | 17.9 | 31.4 | 5.5 | 3.1 | 5.4 |
| FY17 | 1,205 | 677 | 1,174 | 31.7 | 155 | 38.0 | 21.4 | 37.1 | 7.8 | 4.4 | 7.6 |
| FY18 | 1,989 | 1,153 | 1,770 | 43.0 | 273 | 46.2 | 26.8 | 41.1 | 7.3 | 4.2 | 6.5 |
| FY19 | 3,035 | 1,770 | 3,025 | 68.9 | 340 | 44.1 | 25.7 | 43.9 | 8.9 | 5.2 | 8.9 |
| 5 yr Avg | | | | | | 37.8 | 20.5 | 36.0 | 7.0 | 3.8 | 6.7 |
2 | Chola | 52 week High (Rs.) | 52 week Low (Rs.) | March ending
price (Rs.) | EPS (Rs.) | BV (Rs.) | P/E (xs) | P/BV (xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 123 | 56 | 118 | 5.6 | 41 | 22.2 | 10.0 | 21.1 | 3.0 | 1.4 | 2.9 |
| FY16 | 151 | 108 | 143 | 7.3 | 47 | 20.8 | 14.9 | 19.6 | 3.2 | 2.3 | 3.1 |
| FY17 | 249 | 139 | 193 | 9.2 | 55 | 27.1 | 15.2 | 21.0 | 4.5 | 2.5 | 3.5 |
| FY18 | 302 | 193 | 290 | 11.7 | 65 | 25.7 | 16.4 | 24.7 | 4.6 | 3.0 | 4.4 |
| FY19 | 352 | 208 | 290 | 15.2 | 79 | 23.2 | 13.7 | 19.1 | 4.5 | 2.6 | 3.7 |
| 5 yr Avg | | | | | | 23.8 | 14.0 | 21.1 | 4.0 | 2.4 | 3.5 |
3 | L&T Finance | 52 week High
(Rs.) | 52 week Low
(Rs.) | March ending
price (Rs.) | EPS (Rs.) | BV (Rs.) | P/E (xs) | P/BV (xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 83 | 60 | 63 | 4.1 | 31 | 20.3 | 14.6 | 15.4 | 2.7 | 2.0 | 2.1 |
| FY16 | 75 | 48 | 64 | 4.1 | 33 | 18.2 | 11.8 | 15.5 | 2.3 | 1.5 | 1.9 |
| FY17 | 124 | 64 | 123 | 5.0 | 33 | 24.9 | 12.7 | 24.8 | 3.7 | 1.9 | 3.7 |
| FY18 | 214 | 119 | 157 | 6.1 | 55 | 34.9 | 19.5 | 25.7 | 3.9 | 2.2 | 2.9 |
| FY19 | 190 | 111 | 152 | 10.7 | 64 | 17.7 | 10.4 | 14.3 | 2.9 | 1.7 | 2.4 |
| 5 yr Avg | | | | | | 23.2 | 13.8 | 19.1 | 3.1 | 1.8 | 2.6 |
4 | Mahindra Finance | 52 week High (Rs.) | 52 week Low (Rs.) | March ending price (Rs.) | EPS
(Rs.) | BV
(Rs.) | P/E (xs) | P/BV
(xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 345 | 230 | 254 | 13.5 | 92 | 25.6 | 17.0 | 18.8 | 3.8 | 2.5 | 2.8 |
| FY16 | 294 | 173 | 243 | 10.9 | 99 | 27.0 | 15.9 | 22.3 | 3.0 | 1.8 | 2.5 |
| FY17 | 405 | 232 | 315 | 6.5 | 105 | 23.3 | 35.8 | 48.6 | 3.9 | 2.2 | 3.0 |
| FY18 | 524 | 290 | 462 | 17.4 | 156 | 30.1 | 16.7 | 26.5 | 3.4 | 1.9 | 3.0 |
| FY19 | 538 | 351 | 421 | 25.2 | 177 | 21.3 | 13.9 | 16.7 | 3.0 | 2.0 | 2.4 |
| 5 yr Avg | | | | | | 25.5 | 19.9 | 26.6 | 3.4 | 2.1 | 2.7 |
5 | Shriram Transport | 52 week High (Rs.) | 52 week Low (Rs.) | March ending
price (Rs.) | EPS
(Rs.) | BV
(Rs.) | P/E
(xs) | P/BV
(xs) | ||||
| | | | | | | High | Low | Close | High | Low | Close |
| FY15 | 1,286 | 697 | 1,114 | 54.6 | 407 | 23.6 | 12.8 | 20.4 | 3.2 | 1.7 | 2.7 |
| FY16 | 1,206 | 737 | 954 | 51.9 | 448 | 23.2 | 14.2 | 18.4 | 2.7 | 1.6 | 2.1 |
| FY17 | 1,325 | 778 | 1,078 | 55.4 | 425 | 23.9 | 14.0 | 19.4 | 3.1 | 1.8 | 2.5 |
| FY18 | 1,543 | 898 | 1,441 | 108.4 | 440 | 14.2 | 8.3 | 13.3 | 3.5 | 2.0 | 3.3 |
| FY19 | 1,671 | 904 | 1,273 | 112.8 | 607 | 14.8 | 8.0 | 11.3 | 2.8 | 1.5 | 2.1 |
| 5 yr Avg | | | | | | 20.0 | 11.5 | 16.6 | 3.0 | 1.7 | 2.6 |
Particulars | FY19 (Rs. Mn) | % contribution |
Brokerage Income | 5,260 | 67.3% |
Fee Income | 1,262 | 16.1% |
Interest Income | 698 | 8.9% |
Net gain on fair
value changes | 497 | 6.4% |
Others | 103 | 1.3% |
Total | 7,820 | 100.0% |
Management Team | Designation | With HDFC Securities since | Brief Profile and Prior Experience | Qualification |
Mr. Bharat Shah | Chairman | 2014 | - Mr. Bharat Shah is one of the founding members of HDFC
Bank and has been with the group since Inception handling multiple roles. - Having retired as an executive director and an
advisor to HDFC Bank. He also serves on multiple boards like 3M India, Exide
Industries, Hexaware Technology Ltd. | - B. Sc from Mumbai University - Higher National Diploma in Applied Chemistry
from London University. |
Mr.Dhiraj Relli | Managing Director & CEO | 2015 | - Mr. Dhiraj Relli is the MD of HDFCSEC since 2015. Prior to the current assignment, he was with HDFC bank for more than 5 years as its
Branch banking head. - He has a total experience over nearly 2 decades
and has been with HDFC group for over a decade. He is a Charted Accountant
from ICAI | - Chartered Accountant - ACA, Advanced Mgmt. Prog. (IIM Bengaluru) |
Mr.Siddharth
Shah | Head -Branch Dealing | 2010 | - Mr. Siddharth Shah has a total experience of over
2 decades in the financial industry space. - He heads branch dealing in HDFCSEC. Prior to the current assignment he was employed
with HDFC Bank, where he started his career. | - B Com. from University of Mumbai |
Mr. C. V. Ganesh | Chief Operating Officer | 2008 | - Mr. C V Ganesh is the COO and has been employed
with the company for over a decade. - Prior to the current assignment
he was employed with Citi Technology Services Ltd. | - Chartered Accountant - Cost and Works Accountant |
Consolidated (Rs. mn) | FY14 | FY15 | FY16 | FY17 | FY18 | FY19 | 3yr CAGR
(FY16-19) | 5yr CAGR
(FY14-19) |
Net Revenues | 2,631 | 4,170 | 4,016 | 5,532 | 8,000 | 7,820 | 24.9% | 24.3% |
YoY | | 58.5% | -3.7% |