Name: Latest research reports of Equitas Holdings Ltd. authored by Motilal Oswal and published by - Trendlyne research reports.
Item: Equitas Holdings Ltd.
Rating: 5
Author: Motilal Oswal

Moratorium book swells; Asset quality a key monitorable

Buy: Equitas Holdings Ltd.

Target

Motilal Oswal

17 May 2020 In 4QFY20, EQUITAS provided higher than required provisions toward COVID-19, which affected earnings despite strong NII/PPoP growth. Inspite of the lockdown in the last few days of Mar20, AUM growth was steady at 31% YoY. We remain cautious of EQUITAS asset quality trends in the near term as 98.3% of borrowers have availed moratorium (93% of portfolio value). We cut our FY21/FY22E PAT estimate to primarily factor in higher delinquency trend and moderation in loan growth. Maintain Buy. 4QFY20 PAT stood at ~INR430m (33% YoY decline, 41% below estimates) affected by higher provisions (INR996m) toward COVID-19. However, NII grew 35% YoY to INR4.2b led by gross AUM growth of 31% YoY. NIMs for FY20 improved by 56bp to 9.1%. During FY20, NII/PPoP/PAT grew ~30%/40%/16% YoY. Total opex increased 14% YoY to INR3.1b, led by ~28% YoY growth in staff expense while total revenues increased 26% YoY.