4QFY2019 Result Update | Finance
June 04, 2019
Aditya Birla Capital
BUY
CMP
`102.5
Performance Highlights
Target Price
`130
Particulars (` cr)
4QFY19
3QFY19
% chg (qoq) 4QFY18
% chg (yoy)
Investment Period
12 Months
PBT
4090
3380
21.0
2570
59
PAT
259
206
25.7
170
52
Source: Company, Angel Research
Stock Info
Aditya Birla Capital (ABCL), a financial services provider, continued its robust growth
Sector
Finance
Market Cap (` cr)
21,772
in business operation in 4QFY19 as well. The company’s consolidated PBT
Beta
1.2
increased by 59% yoy and PAT jumped by 52% yoy to `259cr for Q4FY19. Growth
52 Week High / Low
152/76
was supported by lending & AMC business, while health insurance continued to
Avg. Daily Volume
2,38,552
report loss; however management expects it to breakeven in next 2-3 years.
Face Value (`)
10
BSE Sensex
39,714
Coherent strategies for each segment propels overall growth
Nifty
11,922
The company’s operations are divided in 8 segments. Of these, major income
Reuters Code
ADTB.NS
generation comes NBFC, Asset Management, Life insurance and housing finance.
Bloomberg Code
ABCAP.IN
NBFC: The segment includes retail, SME and UHNI lending, constituting 53% of the
loan mix; loan book increased by 20% yoy to `51,714cr in this segment. GNPA
Shareholding Pattern (%)
and NPA were maintained at 1.05% and 0.55% respectively. In tough liquidity
scenario, ABCL was able to reduce COF and high share of yield asset helped NIM
Promoters
72.8
at 5.2%.
MF / Banks / Indian Fls
7.0
Asset Management: AUM for FY2019 increased moderately 6% and equity mix in
FII / NRIs / OCBs
3.6
the AUM went up 400bps to 36%. On profitability front, it reported highest ever
Indian Public / Others
16.6
PBT/AUM of 29bps for Q4FY2019.
Insurance: Reported healthy APE growth of 41% yoy in 4QFY2019 largely owing to
HDFC Bank branch network. EV grew 14% yoy to `4,900cr and VNB margin
improved 520bps yoy to 9.5% primarily owing to (1) HDFC Bank partnership, (2)
Abs. (%)
3m 1yr
3yr
improvement in persistence in every bucket (13th mth, 25th mth and 37th mth), and
Sensex
9.0
12.4
54.1
(3) increase in share of retail protection business.
ABCL
(0.8)
(32.5)
-
Housing finance: Advances grew at
40% yoy led by affordable housing in
4QFY2019 taking the book to `11,405cr. Despite aggressive growth, asset quality
Price chart
remained steady (stage 3 - 0.67% and Net stage 3 - 0.37%). NIM remained under
300
pressure at 3.1% due to increase in cost of funds and increased competition from
250
200
banks. Cost-to-income declined from 64% in Q4FY2018 to 47% in Q4FY2019.
150
Outlook & Valuation: We believe broad based and integrated financial offerings will
100
50
enable ABCL to benefit from financialisation of savings. We expect ABCL’s PAT to
0
register CAGR of 42% over FY2019-21E, largely driven by lending segment and
AMC. We recommend a Buy on the stock with a target price of `130.
Key Financials
Source: Company, Angel Research
Y/E March (` cr)
FY19
FY20E
FY21E
PBT
1,796
2,368
3,032
% chg
25
32
28
PAT
871
1,281
1,699
% chg
2
47
33
EPS
4
6
8
Jaikishan Parmar
ROE
9
12
14
Research Analyst
P/B
2.3
2.0
1.8
022 - 39357600 Ext: 6810
P/E
25
17
13
Source: Company, Angel Research; Note: CMP as of June 03, 2019
Please refer to important disclosures at the end of this report
1
Aditya Birla Capital Ltd | Q4FY2019 Result Update
Outlook & Valuation:
We believe broad based and integrated financial offerings will enable ABCL to
benefit from finacialisation of savings. Core lending business (after adjusting
value of AMC, Life Insurance, ABML & Others) is available at 1.1x of FY20E
BV. We expect ABCL’s PAT to register CAGR of 42% over FY2019-21E, largely
driven by lending segment and AMC. We recommend a Buy on the stock and
an SOTP based Target Price of `130.
Exhibit 1: SOTP valuation summary
Valuation
Particulars
Stake
Value/share (`)
Methodology
NBFC
100%
1.7x FY20E PBV
75
HFC
100%
1.7x FY20E PBV
12
AMC
51%
4% of AUM
23
Life Insurance
51%
1.75x FY18 EV
20
ABML
74%
CMP
1
Fair value per share
130
Consolidated Profit & Loss
Y/E March (` cr)
FY19
FY20E
FY21E
Segment PBT
NBFC
1,328
1,602
1,948
Life Insurance
132
144
159
Asset Management
647
673
811
HFC
107
152
213
Health Insurance
-257
-100
-
Total PBT
1,796
2,368
3,032
YoY
25
32
28
Consolidated PBT
1,796
2,368
3,032
Taxes
569
758
1,001
Tax Rate (%)
32
32
33
Consolidated PAT
1,227
1,610
2,032
Minority Interest
356
329
333
Consolidated PAT Post MI
871
1,281
1,699
2
47
33
June 03, 2019
2
Aditya Birla Capital Ltd | Q4FY2019 Result Update
Research Team Tel: 022 - 39357800
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
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registration number INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory
authority for accessing /dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or
co-managed public offering of securities of the company covered by Analyst during the past twelve months.
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Disclosure of Interest Statement
Aditya Birla Capital Ltd
1. Analyst ownership of the stock
No
2. Angel and its Group companies ownership of the stock
No
3. Angel and its Group companies' Directors ownership of the stock
No
4. Broking relationship with company covered
No
Ratings (Based on expected returns
Buy (> 15%)
Accumulate (5% to 15%)
Neutral (-5 to 5%)
over 12 months investment period):
Reduce (-5% to -15%)
Sell (< -15)
Note: We have not considered any Exposure below ` 1 lakh for Angel, its Group companies and Directors
June 03, 2019
3
