Hold Bharat Financial Inclusion; target of Rs 1439: Centrum

Centrum's research report on Bharat Financial Inclusion

Bharat Financial Inclusion Ltd (BFIL), for Q1FY19, continued to report good set of numbers with the non-AP loan book growing 43.7% YoY to Rs13,832 crore as on 30 Jun’18, the fastest growth post-demonetisation. Net interest income and pre-provisioning profit grew by 70% and 56%, respectively. With a 207bps YoY decline in cost-income ratio (CI%) and lower credit cost, the net profit grew at a robust pace of 196% (2.9x) to Rs142 crore. Asset quality remained healthy with the gross NPAs at 0.3% and net NPAs at 0.1%, as on 30 Jun’18.

Outlook

We maintain our hold recommendation valuing the stock at 4.5x its FY20E adjusted book value (ABV), arriving at a target of Rs1,439.