Buy Shriram City Union Finance; target of Rs 1400: Motilal Oswal

Motilal Oswal's research report on Shriram City Union Finance

SCUF posted 3QFY21 PAT of INR2.8b (-6% YoY; 45% beat). While NII stood at INR8.8b (in line), lower-than-expected credit costs (INR1.8b v/s our estimate of INR3b) led to the beat. Total 3QFY21 credit costs include INR5.9b worth of COVID-19 provisions. n The quarter was characterized by a healthy pickup in disbursements and strong performance on asset quality.

Outlook

We increase our FY22E/FY23E EPS estimates by 7-10% to factor in stronger growth and normalized credit costs. Maintain Buy with a TP of INR1,400/share (0.9x FY23E BVPS).