Hold Edelweiss Financial; target of Rs 77: ICICI Direct

ICICI Direct's research report on Edelweiss Financial

Edelweiss Financials reported a weak set of Q1FY21 numbers wherein the company reported a consolidated loss of Rs 264 crore mainly due to impairment of Rs 145 crore and muted performance in credit and insurance business. In credit business, the wholesale lending book de-grew 18% QoQ to Rs 10953 crore. Advances de-growth led to dip in net revenue by 92% QoQ to Rs 95 crore. Muted topline and higher provisions led to a loss worth Rs 156 crore. In retail credit (~55% of overall loan book), EHFL growth was stable with loan book at Rs 4490 crore, up 3.8% QoQ. ERFL loan growth came at Rs 1312 crore, down 5% QoQ.

Outlook

Existing shareholders will receive shares of step-down companies under the current rejig of stakes but we believe this may take two to three years. We maintain HOLD rating with a target price of Rs 77.