External broker reports(aggregated public sources), Axis Direct

Axis Direct

External broker reports(aggregated public sources)

Axis Direct is the flagship brand under Axis Securities Limited, a subsidiary of Axis Bank in India. 

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Equity Bottom-Up

<ul><li>Mannapuram witnessed a sharp rebound in the gold loan business in Q2FY22 with a yield tradeoff on high ticket size loans</li><li>With tweaks in its business model, the company has been able to bring back growth in its gold loan book</li><li>However, on attractive valuations and improved growth prospects, we revise our rating from HOLD to BUY with a target price of Rs 230 (1.5x FY24E ABV).</li></ul><div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

Mannapuram witnessed a sharp rebound in the gold loan business in Q2FY22 with a yield tradeoff on high ticket size loansWith tweaks in its business model, the company has been able to bring back growth in its gold loan bookHowever, on attractive valuations and improved growth prospects, we revise our rating from HOLD to BUY with a target price of Rs 230 (1.5x FY24E ABV).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Manappuram Finance: Gold Loan Growth Picks Up Albeit With Pressure on Margins

External broker reports(aggregated public sources), Motilal Oswal Financial Services Limited

Motilal Oswal

Motilal Oswal Financial Services Limited

Motilal Oswal Financial Services Limited is an Indian diversified financial services firm offering a range of financial products and services. 

Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

PPOP (7% miss) declined by 8% YoY and 15% QoQ to INR6b. Credit costs remained elevated in the MFI subsidiary due to the impact of the second COVID wave. We expect credit costs to remain elevated in 3Q and moderate from 4QFY22 onwards. While MGFL demonstrated greater sequential Gold loan growth (~13% QoQ) by effectively winning over higher ticket Gold loan customers, this has come at the cost of compression in spreads and large incentives paid to employees.<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

PPOP (7% miss) declined by 8% YoY and 15% QoQ to INR6b. Credit costs remained elevated in the MFI subsidiary due to the impact of the second COVID wave. We expect credit costs to remain elevated in 3Q and moderate from 4QFY22 onwards. While MGFL demonstrated greater sequential Gold loan growth (~13% QoQ) by effectively winning over higher ticket Gold loan customers, this has come at the cost of compression in spreads and large incentives paid to employees.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Trading off margin and spreads for Gold loan growth

Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

*Ignoring Credit Deterioration, Results Improve: HDFC Ltd (HDFC.IN) [HDFC] reported FY 2Q22 results of INR 37.3 bn, increasing INR 9.8 bn (35.5%) linked quarter basis. HDFC witnessed positive operating jaws; a massive linked quarter increase in dividends; robust loan growth; a drop in loss provisions; and a lower tax rate. Nothing like pulling on every earnings lever to achieve the result you want; and*Credit Quality Worsens: Given the INR 3.8 bn in net recovery during FY 2Q22, net new NPLs accelerated to INR 22.1 bn and increased 51.1% on an annualized basis. We also find that HDFC’s reserve still needs shoring up by another INR 200 bn or over a year of PBT.

*Ignoring Credit Deterioration, Results Improve: HDFC Ltd (HDFC.IN) [HDFC] reported FY 2Q22 results of INR 37.3 bn, increasing INR 9.8 bn (35.5%) linked quarter basis. HDFC witnessed positive operating jaws; a massive linked quarter increase in dividends; robust loan growth; a drop in loss provisions; and a lower tax rate. Nothing like pulling on every earnings lever to achieve the result you want; and*Credit Quality Worsens: Given the INR 3.8 bn in net recovery during FY 2Q22, net new NPLs accelerated to INR 22.1 bn and increased 51.1% on an annualized basis. We also find that HDFC’s reserve still needs shoring up by another INR 200 bn or over a year of PBT.  

*Credibility Gap Continues To Widen: LIC Housing Finance (LICHF.IN) [LIC] reported FY 2Q22 bottom-line results of INR 2.5 bn, increasing INR 945 mn (61.6%) linked quarter. Results were simply odd, and driven by a loss provision cut of nearly INR 2.0 bn (23.4%) whilst problem loans continued to modestly tick higher. The oddness, in our view, came from now zero NCOs during FY 2Q22; and*Lack Of Clarity On Credit Delta: Despite the lack of NCOs, net new NPLs at LIC still increased 2.4% annualized versus 190.3% at FY 1Q21. By our calculation, LIC management ought to think about adding another INR 144 bn to the reserve.

*Credibility Gap Continues To Widen: LIC Housing Finance (LICHF.IN) [LIC] reported FY 2Q22 bottom-line results of INR 2.5 bn, increasing INR 945 mn (61.6%) linked quarter. Results were simply odd, and driven by a loss provision cut of nearly INR 2.0 bn (23.4%) whilst problem loans continued to modestly tick higher. The oddness, in our view, came from now zero NCOs during FY 2Q22; and*Lack Of Clarity On Credit Delta: Despite the lack of NCOs, net new NPLs at LIC still increased 2.4% annualized versus 190.3% at FY 1Q21. By our calculation, LIC management ought to think about adding another INR 144 bn to the reserve.

LIC Housing Finance – No NCOs Whatsoever?

Gold lending is a high moat business and we believe specialists like MGFL will continue to benefit. However, most positives are priced in. We revise our rating from BUY to HOLD with a target price of Rs 185 (1.4x FY23E ABV).<div class="content-highlight">Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</div>

Gold lending is a high moat business and we believe specialists like MGFL will continue to benefit. However, most positives are priced in. We revise our rating from BUY to HOLD with a target price of Rs 185 (1.4x FY23E ABV).Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Manappuram Finance: Gold AUM Decline Disappoints

India

Manappuram Finance Ltd. is a non-banking finance company. The Company offers loans against gold collateral, business loans, vehicle loans, foreign exchange and money transfer services; and sells gold coins.

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Manappuram Finance (MGFL IN)

Manappuram Finance: Gold Loan Growth Picks Up Albeit With Pressure on Margins

However, on attractive valuations and improved growth prospects, we revise our rating from HOLD to BUY with a target price of Rs 230 (1.5x FY24E ABV).

Axis Direct

Trading off margin and spreads for Gold loan growth

PPOP (7% miss) declined by 8% YoY and 15% QoQ to INR6b. Credit costs remained elevated in the MFI subsidiary due to the impact of the second COVID...

Motilal Oswal

HDFC Ltd. – In the Land of The Blind

HDFC: HDFC reported a QOQ FY 2Q22 results increase of 35.5%, as management pulled on every earnings lever. Net new NPLs increased 51.1% annualized,...

Thomas J. Monaco

LIC Housing Finance – No NCOs Whatsoever?

LIC HOUSING: LIC reported a QOQ FY 2Q22 bottom-line increase of 61.6%, driven by a loss provision cut. Oddly, LIC had zero NCOs and negative loan...

Thomas J. Monaco

Manappuram Finance: Gold AUM Decline Disappoints

Gold lending is a high moat business and we believe specialists like MGFL will continue to benefit. However, most positives are priced in. We...

Axis Direct

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