Edelweiss' research report on Shriram City Union Finance
SCUF’s growth trajectory seems to be normalising—disbursements (at INR61.4bn) jumped 10% YoY, translating into AUM traction of 16.5% YoY (still below pre demonetisation level of 18-20% growth). Disbursements traction was driven by gold loans (up >20% YoY, contributing >30% to disbursements) and personal loans (up 43% YoY, albeit on lower base), though partly offset by slowdown in auto loans (down >15% YoY). Growth in small enterprise finance book improved 8% QoQ, indicating waning impact of demonetisation and GST. Management is targeting 16-18% AUM growth in FY18 and further improved momentum in FY19.
Outlook
Demonetisation and GST have tested SCUF’s business resilience given its dependence on the self-employed segment. However, recovery trends are encouraging. We estimate 20- 22% AUM CAGR and >40% earnings CAGR (albeit on low base) over FY17-19, with RoA/RoE of >4%/18%. At CMP, the stock trades at 2.5x FY19E P/ABV. We maintain ‘BUY/SP’ with TP of INR 2,630.
For all recommendations report, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
Find the best of Al News in one place, specially curated for you every weekend.
Stay on top of the latest tech trends and biggest startup news.
Read More
