Shriram City Union Finance Ltd. share price target

SCUFs growth in disbursements and AUM were in line with estimates. Disbursements (excluding gold) jumped ~32%, driven by the SME and PL segments. AUM growth at 17% was at a 10-quarter high, although auto loans declined (-15% YoY). Core (Rs and net earnings met expectations, with stable NIM and provisions cost.

9 Operating profit/PAT was as expected. Other income was lower as cash balance from recentcapitalinfusionreduced,butwascompensatedbyhigherNII. 8 Operatingexpensescontinuedtogrowinhighdoubledigits(contrarytomanagement...

City Union Finance (SCUF), the retail finance arm of the Shriram Group, offers diversified loan products ranging from low risk (loan against gold) to high risk segments (small business loans and two-wheeler financing). Strong group parentage (three decades expertise in the finance services space) is among the key positives. The company benefits from Shriram Chits' branch infrastructure and existing customers, deriving more than 85% of its business from Shriram Chits'...

SME, 2W & PL segments continued the strong growth trajectory

SCUFs results were ahead of estimates with strong AUM growth & better than estimated net earnings (8% beat). PAT beat was driven by lower opex and provisions cost. Asset quality was largely stable and PCR further inched up.

yoy to 13.4%. Asset quality remained broadly stable with GNPA/NNPA at 3.2%/0.7%. PCR furtherimprovedto79.6%.Whileneartermdemandforloansislikelytoremainmoderate, we expect growth to pick up pace by H2FY16. At CMP, the stock trades at an attractive...

Rollout of SME products in more branches will help gain traction for this portfolio. Currently, only 55% of its branches lend to SMEs vs. 98% for two wheelers.Sincemostofthebranchescateringtotwowheelersthatopenedin...

Cost/Income increased (425bps YoY, 72bps QoQ) to 42%, owing to higher employee expenses at 77.2%YoY led by higher incentives and benefit expenses. Operating profit grew a modest 5.8%YoY to INR 3.31bn amidst slowdown in core income...

SCUFs results were a mixed bag, with earnings below estimates & asset quality largely stable. NII/PAT was 4/6% below estimates largely driven by sequential NIM decline and higher than estimated opex. Ex-gold, disbursements/AUM grew ~6/13% YoY, while gold disbursements jumped ~15% QoQ. SME & 2W segments continued the strong growth trajectory. GNPA increased ~7% QoQ largely driven by ex-gold portfolios.

Shriram City Union Finance (SCUF) Q4FY15 operating results came in marginally below estimateswithNII/PATatRs5.6bn/Rs1.5bnasagainstourexpectationofRs5.8bn/Rs1.6bn respectively. NII grew by lower than expected 15.8%, due to just 4.8%yoy growth in...