AB Capital – Q4 FY20
CMP – 56
Total Income from operations at 4,844 Crs
4,729 Crs YoY (2.42%) 4,325 Crs (12.03%) QoQ
Year ending: 16,792 Cr vs. 15,172 Cr (10.65%)
Net Profit of 143.7 Cr
258.4 Cr YoY (-44.42%) 250.4 Crs (-42.87%) QoQ
Year ending: 919.8 Cr Vs. 870.9 Crs (5.58%)
EPS (in Rs.) 0.61
1.17 YoY | 1.09 QoQ
Year ending EPS: 4.06 Vs. 3.95
View: Average result. YoY total income increased but profit decreased significantly in Q4 due to impairment of financial instruments in the tune of INR 348 Cr Vs. 65 Cr in corresponding previous quarter.
Business Highlights & Updates
Interest Income for the Q4FY20 is around INR 1,736 Cr Vs. 1,753 Cr in Q4FY 19 Vs. 1,775 Cr in Q3FY20. Therefore declined by 1% in YoY and 2.2% in QoQ.
Interest income for the FY20 is around INR 7,128 Cr Vs. 6,418 Cr in FY19 therefore up by 11% in YoY.
Finance cost for the Q4FY20 is around INR 1,123 Cr Vs. 1,114 Cr in Q4FY19 Vs. 1,142 Cr in Q3FY20. Therefore up by marginally 0.8% in YoY and declined by 1.7% in QoQ.
Lending
Overall lending book (NBFC and Housing Finance) stood at Rs. 59,159 Crores. Raised over Rs. 15,000 Crores of long-term funds during the year. Company has reduced ticket sizes across the board.
NBFC business
Loan book at Rs. 47,057 Crores with focus on SME and retail segments.
Net Interest Margin expanded by 38 bps year on year to 5.29%
Additional COVID related provisions of Rs. 163 Crores in Q4 FY20
Q4FY20 Finance business credit provisioning: 2.73% Vs. 0.49% in YoY. FY20 1.46% Vs. 0.45%.
Housing Finance business
Loan book at Rs. 12,102 Crores, with 95% retail. Maintained net interest margins at over 3%. Cost to Income ratio improved to 46%, as compared to 61% in previous year, aided by scale and operating efficiencies.
Q4FY20 Finance business credit provisioning: 0.91% Vs. 0.19% in YoY. FY20 0.59% Vs. 0.19%.
Asset Management
Total average assets under management (AAUM) at Rs. 2,66,988 Crores
Domestic equity AAUM at 36% of overall domestic AAUM. Profit after tax grew 10% year on year to Rs. 494 Crores; Return on equity at 38.9%.
Big increase in the number of transactions being done digitally, from 57% in 2018 to 95% in Apr-May ‘20
Insurance
Total gross premium of life insurance and health insurance grew 11% year on year to Rs. 8,882 Crores
**Life Insurance**Individual First Year Premium (FYP) stood at Rs 1,702 Crores, with year on year growth impacted due to the nation-wide lockdown in last two weeks of March ’20
Renewal Premium grew 21% year on year to Rs. 4,353 Crore
Health Insurance business
Gross written premium at Rs. 872 Crores, grew 76% over the previous year, ahead of industry growth of 27% for Stand Alone Health Insurers, with Retail business contributing 72%.
Business continues to build scale with significant improvement in combined ratio at 134% vs. 149% in the previous year.
Total active customer base grown to ~20 Million
Financials
ROE and ROA is around 9.8% and 1% respectively and book value per share is around INR 41 and share is currently trading at 1.35x of its book value. Company is currently trading at annualized PE of around 14 which is fair as per Industry benchmark. Promoter holding in the company is around 70.5% which is decreased by around 2% in QoQ. FIIs, mutual fund and Insurance cos hold around 2.2%. 1.6% and 2.6% respectively. Cash & Cash equivalent as of FY20 is around INR 2,825 Cr Vs. 739 Cr in FY19
Share price high 115 (52 week) and now 56 more than 51% corrected from their peak. Aditya Birla Capital Limited (ABCL) is the holding company for the financial services businesses of the Aditya Birla Group. With subsidiaries that have a strong presence across Protecting, Investing and Financing solutions.
Share support price is INR 48/42. Long term investor should continue with the company.
Opportunities
Share corrected more than 50% from their peak due to NBFC overall sector stress and due to Covid – 19 impact health care business and life insurance business also growing.
Share corrected more than 50% from their peak due to NBFC overall sector stress and due to Covid – 19 impact health care business and life insurance business also growing.
Sources:
Various publications
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