RESULTS REVIEW 2QFY16

27 OCT 2015

Cholamandalam Investment & Finance

BUY
INDUSTRY
CMP (as on 26 Oct 2015)
Target Price

NBFCs
Rs 602
Rs 718

Nifty

8,261

Sensex

27,362

KEY STOCK DATA

Bloomberg

CIFC IN

No. of Shares (mn)

156

MCap (Rsbn) / ($ mn)

94 / 1,447

6m avg traded value (Rsmn)

46

STOCK PERFORMANCE (%)

52 Week high / low

Rs 744/433

3M

6M

12M

Absolute (%)

(12.8)

2.4

24.0

Relative (%)

(10.1)

2.7

22.1

SHAREHOLDING PATTERN (%)

Promoters

53.16

FIs & Local MFs

24.74

FIIs

15.57

Public & Others

Source : BSE

Darpin Shah
darpin.shah@hdfcsec.com
+91-22-6171-7328
Siji Philip
siji.philip@hdfcsec.com
+91-22-6171-7324

6.53

Revving up on the tarmac

CIFCs 2Q results beat estimates despite the shift to
120DPD six quarters ahead of the regulatory
deadline. This impacted profits by Rs 536mn (44% of
reported PAT) and added Rs 2.7bn (~1%) to GNPA.
The headroom was provided by one-time benefits
worth Rs 210mn from income release in the
securitisation pool (Rs 170mn) and reversal of
standard asset provisions (Rs 40mn) from
securitisation.
Disbursements were at a nine-quarter high (+21%
YoY), driven by the vehicle finance (VF) segment.
AUM growth was <10% with muted performance in
VF. Even after the shift, NIM improved ~80bps YoY to
7.6%.Opex growth was muted, hence C-AA declined
~15bps QoQ to 3.15%.
CIFC has cushioned its asset quality and earnings
over the next year with the move to 120DPD. With
improving growth in the cyclical VF business, steady
momentum in Home Equity (HE), NIM tailwinds and
improving operational efficiency, CIFC is well placed
Financial Summary (Rs mn)
Net Interest Income
PPOP
PAT
EPS (Rs)
ROAE (%)
ROAA (%)
Adj. BVPS (Rs)
P/ABV (x)
P/E (x)

2QFY16
5,028
2,979
1,205
7.7

2QFY15
4,113
2,305
951
6.6

YoY (%)
22.2
29.3
26.6
16.5

to achieve our est RoAA of 2.21% by FY18 (from

1.92% in FY15). Maintain BUY with a TP of Rs 718 (3x
1-yr fwd ABV of Rs 239).

Highlights of the quarter

CIFC shifted to 120DPD with the one-time

benefits, which resulted in Rs 2.7bn (~1%) increase
in GNPA, income reversals of Rs 170mn and
additional provisions of Rs 270mn.
AUM growth of 10% and 80bps NIM improvement
led to NI (Rs 5bn, +22%) beat of 3%. Further, with
controlled opex (10%), C-AA declined ~15bps QoQ
to 3.15%. Despite higher provisions, net earnings
at Rs 1.2bn were 9% higher than estimates.
While the HE disbursements increased <8%, a
healthy 28% growth in the VF segment led to
growth in overall disbursements (21%). We believe
the VF disbursements are likely to sustain given
improving collection efficiency, while the HE
disbursements are expected to remain steady.
1QFY16 QoQ (%)
4863.3
3.4
2,774
7.4
1,103
9.3
7.7
0.6

FY15
13,762
9,818
4,350
30.3
17.5
1.92
162.9
3.69
21.2

FY16E
15,902
11,503
5,222
33.5
16.6
2.05
186.5
3.23
18.0

FY17E
18,507
13,747
6,442
41.3
16.6
2.18
219.6
2.74
14.6

FY18E
21,556
16,333
7,736
49.6
17.3
2.21
259.0
2.32
12.1

Source: Company, HDFC sec Inst Research

HDFC securities Institutional Research is also available on Bloomberg HSLB <GO>& Thomson Reuters

CIFC : RESULTS REVIEW 2QFY16

Better performance despite 120DPD shift

Core earnings at Rs 5bn (+22% YoY and 3% QoQ)

were 3% ahead of estimates. Interest reversal of

Rs 170mn was neutralised with income release
of the same amount in the securitised portfolio.

Despite the shift to 120DPD, calculated yields

(15.3%) were higher ~30bps YoY. Yields were

cushioned by the VF segment (16.8%, +40bps
YoY). However, competition led to HE yields
dropping ~55bps to 13.9%. CIFC stands to
benefit with higher growth in the fixed-rate highyielding VF segment. Further, the risk of higher
interest reversals recedes with the shift to
120DPD.

As ~49% of its total borrowings are from banks,

CIFC will benefit from the recent base rate cut.

But despite several positives, we conservatively
factor calculated NIM expansion of avg. 15bps
over FY15-18E to 5.8%

Operating expenses were controlled with a mere

10% YoY growth (2% QoQ decline), led by slower

growth in business origination expenses
(+5% YoY). Further, with improving collection
efficiency, the other opex, too, grew a mere 6%
YoY. However, staff cost increased by 25/20%
YoY/QoQ, as CIFC made additional provisions
towards the new incentives programmes
(branch-led profitability). With improving
collection and growth trends, we expect C-AA to
decline ~20bps over FY15-18E to 3.1%.

Additional provisions of Rs 270mn and

incremental standard asset provisions of

Rs 100mn (5bps impact) pushed up total
provisions to Rs 1.15bn (+33/7% YoY/QoQ), i.e.

1.73% ann. As it is ahead of the regulatory

deadline, we believe CIFC has lowered the risk
of higher provisions cost. However, we
conservatively factor LLP of average 1.23% over
FY15-18E while considering PCR improvement.

The companys disbursements (Rs 36.7bn) grew

at 21% (+5% QoQ) and were at a nine-quarter

high, led by 28% growth in the VF segment
(Rs 28bn). The strong growth was driven by HCV
(2x YoY) and 17-28% growth in other segments
(except tractors, which grew at ~2%). With steep
competition, HE disbursements were <8%. With
improving macros and collection trends, we
expect VF disbursements to sustain and HE to
improve gradually.

AUM grew ~10% YoY to Rs 269bn; driven by

~25% growth in the HE business (Rs 81bn, 30.1%
of AUM) and ~4% growth in the VF segment (Rs
182bn, 67.7% of AUM). With improving
disbursements trends, we have factored AUM
growth of 17% CAGR over FY15-18E.

At 120DPD, GNPAs (Rs 11.8bn; 4.4%) grew ~38%

QoQ, including the shift impact of Rs 2.7bn (1%).

The management hinted that a move to 90DPD
would lead to further addition of ~1-1.2%. With
<30% decline in PCR (-740bps QoQ), NNPAs
jumped to 3.1%. Being six quarters ahead of the
regulatory guidelines, coupled with improving
macros and increasing proportion of the low-risk
HE business, CIFCs asset quality is expected to
remain stable. However, we have factored
GNPAs at 4.2-4.7% over FY16-18E.

Page | 2

CIFC : RESULTS REVIEW 2QFY16

Five Quarters At A Glance

(Rsmn)
Net Interest Income
Non Interest Income
Total Income
Expenses
Operating Profits
Provisions
PBT
TAX
PAT
Other details
Disbursements (Rs bn)
VF
HE
AUM (Rs bn)
VF
HE
On books
Off books
Borrowings (Rs bn)
Bank Borrowings
CRAR (%)
Tier I (%)
Profitability
Yield on Advances (%) (calc.)
Cost of Funds (%) (calc.)
Spreads
NIM (calc.) (%)
Cost-Income ratio (%)
Tax rate (%)
Asset Quality
Gross NPA (Rs mn)
Net NPA (Rs mn)
Gross NPAs (%)
Net NPAs (%)
Coverage Ratio (%)
Gross NPAs VF (%)
Gross NPAs HE (%)
Source: HDFC sec Inst Research

2QFY15
4,113
90
4,203
1,898
2,305
863
1,441
490
951

3QFY15
4,584
65
4,650
1,965
2,684
997
1,687
574
1,113

4QFY15
4,498
21
4,519
1,904
2,615
581
2,034
677
1,356

1QFY16
4,863
39
4,902
2,128
2,774
1,069
1,705
603
1,103

2QFY16
5,028
37
5,064
2,085
2,979
1,147
1,832
627
1,205

YoY Growth QoQ Growth

22.2%
3.4%
-59.1%
-6.2%
20.5%
3.3%
9.9%
-2.0%
29.3%
7.4%
32.9%
7.3%
7.4%
27.1%
27.9%
4.0%
26.6%
9.3%

30.3
21.9
7.2
244.7
174.7
64.9
212.2
32.5
199.6
96.5
19.8
12.6

30.8
22.9
7.5
247.4
174.1
68.3
217.4
29.9
202.6
116.7
20.9
12.7

35.1
25.6
8.6
254.5
176.4
72.8
219.0
35.5
194.8
102.0
21.2
13.0

35.1
25.9
8.3
260.6
178.3
76.8
231.3
29.3
206.1
100.8
20.6
13.4

36.7
27.9
7.7
268.6
181.9
80.9
231.4
37.2
206.4
101.1
20.8
13.8

21.2%
27.5%
7.3%
9.8%
4.1%
24.7%
9.1%
14.6%
3.4%
4.8%
102 bps
116 bps

4.7%
7.8%
-7.4%
3.1%
2.0%
5.3%
0.1%
27.0%
0.1%
0.2%
24 bps
35 bps

15.1
10.2
4.8
6.8
45.2
34.0

15.6
9.9
5.6
7.5
42.3
34.0

14.9
9.8
5.1
7.2
42.1
33.3

15.3
9.9
5.4
7.6
43.4
35.3

15.3
9.9
5.4
7.6
41.2
34.2

27 bps
-31 bps
58 bps
80 bps
-399 bps
23 bps

7 bps
2 bps
5 bps
5 bps
-223 bps
-112 bps

6,362
3,426
2.6
1.4
46.2
3.0
1.4

6,926
3,710
2.8
1.5
46.4
3.2
1.6

7,890
5,091
3.1
2.0
35.5
3.7
1.9

8,600
5,420
3.3
2.1
37.0
3.8
2.3

11,820
8,328
4.4
3.1
29.5
5.0
3.2

85.8%
143.1%
180 bps
170 bps
-1661 bps
201 bps
179 bps

37.5%
53.6%
110 bps
102 bps
-742 bps
116 bps
92 bps

Interest reversal of Rs 170mn was

neutralised with income release of the
same amount in the securitised
portfolio.
Staff cost jumped 25/20% YoY/QoQ
Driven by shift to 120 DPD and
additional standard asset provisions

HCV grew 2x, while LCV, used and cars

grew ~17-28%; tractors growth was
flat YoY
Home equity portfolio stood at ~30%
vs. ~27% YoY
Securitisation of Rs 15bn during the qtr
Bank borrowings stable YoY and QoQ
at ~49%
NIM stable QoQ, yet to witness
benefits of decline in CoF

Led by shift to 120DPD; at 150DPD,

GNPA grew ~6% QoQ to form 3.39%

Page | 3

CIFC : RESULTS REVIEW 2QFY16

Home Equity Disbursement (Rs bn)

22%

24%

24%

24%

21%

73%

72%

74%

73%

74%

76%

1QFY15

2QFY15

3QFY15

4QFY15

1QFY16

2QFY16

32

32

31

31

24

24

23

23

22

10

11

13

14

16

32

27

35

35

34

31

34

34

34

31

32

31

29

27

25

24

23

22

21

21

24

22

2QFY16

33

26

1QFY16

32

23

4QFY15

11

21

AUM: Moderate Growth Cushioned By HE

60.0
40.0

5.0
20.0

2.5

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

2QFY13

24%

21%
76%
4QFY14

11

Growth YoY (%) - RHS

10.0

1QFY13

21%
78%
3QFY14

24%
76%
2QFY14

20%
80%
1QFY14

17%
82%
4QFY13

17%

11

20

3QFY15

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

HE Disbursements: Sub 8% Growth

With improving disbursements

trends, we have factored AUM
growth of 17% CAGR over
FY15-18E.

11

25

-20

1QFY14

19

2QFY15

19

Car & 3 wheelers

1QFY15

10.0

19

Tractors

4QFY14

20

18

HCV

3QFY14

20.0

Used CV

2QFY14

40

LCV

1QFY14

30.0

4QFY13

60

3QFY13

40.0

7.5

AUM growth of 10/3%

YoY/QoQ was driven by HE
portfolio

83%

Segment-wise VF Disbursements
Growth (YoY %)

2QFY13

Vehicle Finance Disbursement Rs bn (LHS)

1QFY13

VF Disbursements: HCV Drives Growth

3QFY13

-10.0

19%

0.0

80%

10.0

2QFY13

10.0

19%

30.0

Others

80%

20.0

Home Equity

1QFY13

50.0

Vehicle Finance

AUM (Rs bn)

Growth (YoY %) RHS

300

50
40
30
20
10
0

200
100
0

1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16

HE disbursements were
slowest in the past four
quarters; declined QoQ for the
second consecutive quarter

30.0

4QFY13

With improving macros and

collection trends, we expect
VF disbursements to sustain
and HE to improve gradually.

40.0

3QFY13

Tractors disbursements were

flat YoY

Disbursements Business-wise

YoY Growth (%)

70.0

2QFY13

In the VF segment, HCV grew

~2x YoY, while LCV and used
cars grew in the range of 1728%

Disbursements Rs bn - RHS

1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16

Surprisingly, HE disbursements
grew just 7% YoY

Disbursements: Gradual Pickup Continues

1QFY13

Disbursements jumped 5%
QoQ and 21% YoY (ninequarter high) led by ~8% QoQ
and 28% YoY growth in the VF
segment

Source : Company, HDFC sec Inst Research

Page | 4

CIFC : RESULTS REVIEW 2QFY16

VF AUM: Muted Growth

HCV

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

20.0

2QFY16

1QFY16

4QFY15

3QFY15

Tractors

Car & 3W

100%

KTK 5%

80%

Haryana
3%

Other
states 8%

Orissa 4%

60%

TN 9% AP (incl.
Telangana)
7%

UP 5%

40%

Mah 12%

Delhi 3%

20%

WB 5%
Kerala 4%

Raj 10%

Guj 6%

Bank Borrowings Form 49%

Bank loans

100.0

50.0

100%

80.0

40.0

80%

60.0

30.0

60%

40.0

20.0

40%

20.0

10.0

20%

Debentures

CPs

Sub debt

CC/WCDL

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

0%

2QFY14

2QFY13

YoY % (RHS)

Punjab 5%

1QFY14

Home Equity AUM: Steady Growth Continues

Chattisgarh
8%

MP 6%

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

0%

1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16

As ~49% of its total

borrowings are from banks,
CIFC will benefit from the
recent base rate cut.

50

State-wise VF AUM

Home Equity AUM (Rs bn)

Home equity AUM continue

to grow at a healthy rate of
25/5% YoY/QoQ

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

Used CV

3QFY13

Vehicle finance portfolio

remains well diversified
across geographies

LCV

2QFY13

Share of tractors remains

stable YoY and QoQ at ~10%

Segment-wise VF AUM

1QFY13

In the VF segment, proportion

of HCV (13%) and used
vehicles (28%) saw marginal
increase QoQ

2QFY13

1QFY13

0%

40.0

4QFY14

20%

100

3QFY14

74 74 75 76 76 75 74 73 72 71 70 69 68 68

4QFY13

40%

80.0
60.0

2QFY14

60%

YoY (%, RHS)

150

1QFY14

23 23 23 23 23 24 25 25 26 27 28 29 29 30

3QFY13

80%

Vehicle AUM Rs bn

200

100%

4QFY13

Others

3QFY13

Home equity

2QFY13

Vehicle finance

1QFY13

Despite strong growth, VF

AUM growth remains muted
at 4%

AUM Break-up: HE Proportion Rises

1QFY13

HE AUM proportion continues

to rise and now stands at
~30%

Source : Company, HDFC sec Inst Research

Page | 5

CIFC : RESULTS REVIEW 2QFY16

HE Yields - RHS
HE NIMs
9.0
%

16.0

7.0

14.0
5.0

12.0

2QFY16

1QFY16

4QFY15

2QFY15

3QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

2QFY13

3.0

1QFY13

10.0

1QFY13
2QFY13
3QFY13
4QFY13
1QFY14
2QFY14
3QFY14
4QFY14
1QFY15
2QFY15
3QFY15
4QFY15
1QFY16
2QFY16
C-I (%, LHS)

Cost to AUM (%, ann.)

Vehicle Finance (% RHS)

4.0

Home Equity Finance (% LHS)

4.0

50.0

3.0

3.5

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

1QFY13

Segmental Asset Quality: VF Remains Stressed

2.0

2QFY16

30.0

1QFY16

4QFY15

2.0

3QFY15

40.0

2QFY15

4.0

1QFY15

50.0

1.0

4.0
2.0
-

2QFY16

6.0

1QFY16

60.0

4QFY15

8.0

3QFY15

70.0

3.0

6.0

2QFY15

10.0

Home Equity (LHS)

Home Equity (%)

1QFY15

80.0

4QFY14

4.0

3QFY14

90.0

2QFY14

5.0

Vehicle Finance (LHS)

Vehicle Finance (%)
Rs bn

1QFY14

PCR (%. RHS)

4QFY13

NNPA %

3QFY13

Asset Quality Deteriorates

GNPA %

3.0

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

2.5

3QFY13

35.0

1.0

3QFY13

3.0

40.0

2.0
3.5

2QFY13

45.0

4QFY14

VF GNPA stood at 5%; HE

GNPA stands at 3.2%

18.0

VH Yields - RHS
VH NIMs

Segmental Expenses Ratio: HE Trending Down

55.0

3QFY14

PCR falls +700bps QoQ to

<30%;

11.0
10.0
9.0
8.0
7.0
6.0
5.0

Efficiency Ratio: Scope For Improvement

2QFY14

At 150DPD, GNPAs were

stable QoQ at 3.39%

14.0

1QFY14

In 2Q, CIFC shifted to

120DPD NPA recognition

14.5

4QFY13

With improving growth

trends and controlled opex
we expect C-AA to decline to
3.1% by FY18E

15.0

3QFY13

Expenses ratio in HE remains

steady QoQ, while that for
VF is elevated

NIMs
%

15.5

2QFY13

Staff cost jumped 25/20%

YoY/QoQ due to one-time
bonus payment

Cost

16.0

1QFY13

Vehicle finance NIM has

gradually improved, despite
asset quality stress

Steady Yields And NIM In HE Business

Yields - LHS

16.5

2QFY13

Home equity NIM continues

to remains steady at 5.1%

NIM: Sequentially Stable

1QFY13

One-time benefit of Rs
170mn cushioned NIM
(stable QoQ at 7.6%)

Source : Company, HDFC sec Inst Research

Page | 6

CIFC : RESULTS REVIEW 2QFY16

1.0
0.5

1.5
1.0
0.5

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

1QFY13

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

Home Equity

VF: GNPA And Pre-tax RoAA

HE: GNPA And Pre-tax RoAA

Pre-tax RoAA %

6.0

Vehicle Finance

2.0

2QFY13

2.5

2QFY13

500

GNPA (%)

Pre-tax RoAA %

4.0

5.0

GNPA (%)

3.0

4.0
3.0

2.0

2.0

1.0

1.0
-

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

4QFY13

3QFY13

2QFY13

RoAA: Higher Provisions Remains Drag

NII
Provisions

Other income
Tax

Opex
RoA (RHS)

10.0

2.9

5.0

2.4

1.9

-5.0

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

1.4

2QFY14

-10.0

1QFY14

Over FY15-18E, we expect

RoAA to inch up to 2.21%
driven by improvement in
efficiency coupled with stable
NIM

1,000

4QFY13

Stable NIM and provisions

coupled with controlled opex
led to 10bps rise in RoAA

1.5

3QFY13

In the HE business, pre-tax

RoAA dropped 30bps QoQ, led
by sharp QoQ rise in
provisions

2.0

2QFY13

With stable NIM and marginal

drop in provisions, VF pre-tax
RoAA was steady at 2.2%

% of AUM (annu.)

1,500

1QFY13

As it is ahead of the
regulatory deadline, we
believe CIFC has lowered the
risk of higher provisions cost.
However, we conservatively
factor LLP of average 1.23%
over FY15-18E while
considering PCR
improvement.

Segmental Provisions: HE Providing Cushion

Provisions Rs mn - RHS

1QFY13

HE provisions at 70bps
includes 20bps towards 120
DPD

Provisions Remain Elevated

1QFY13

Provisions continue to rise as

CIFC shifted to120 DPD and
made additional standard
assets provisions

Source : Company, HDFC sec Inst Research

Page | 7

CIFC : RESULTS REVIEW 2QFY16

Change In Estimates
Rs mn
NII
PPOP
PAT
Adj. BVPS (Rs)

Old
15,902
11,503
5,258
194.3

FY16E
New
15,902
11,503
5,222
187

Change
0%
0%
-1%
-4%

Old
18,469
13,621
6,576
225

FY17E
New
18,507
13,747
6,442
220

Change
0%
1%
-2%
-3%

Old
21,511
16,057
7,840
260

FY18E
New
21,556
16,333
7,736
259

Change
0%
2%
-1%
0%

Source: Company, HDFC sec Inst Research

Peer Valuations
NBFC
CIFC
LICHF
MMFS*
SCUF
SHTF

CMP Mcap
TP
Rating
(Rs) (Rs bn)
(Rs)
602
94
BUY
718
489
247
BUY
569
232
131
NEU
289
1,865 123
BUY 1,976
945
214
BUY 1,065

ABV (Rs)
FY15 FY16E FY17E
163
187
220
150
179
211
86
87
97
606
688
790
390
423
484

FY15
19.9
17.8
15.2
22.0
17.3

P/E (x)
FY16E FY17E
18.0
14.6
14.2
12.3
16.3
13.0
18.0
15.0
16.0
13.4

P/ABV (x)
FY15 FY16E FY17E
3.69
3.23
2.74
3.26
2.73
2.32
2.61
2.59
2.30
3.07
2.71
2.36
2.42
2.23
1.95

ROAE (%)
FY15 FY16E FY17E
17.5
16.6
16.6
18.1
20.5
20.1
15.5
13.1
14.9
15.9
15.5
16.2
14.1
13.7
14.5

ROAA (%)
FY15 FY16E FY17E
1.92
2.05 2.18
1.43
1.54 1.51
2.49
2.09 2.32
3.24
3.49 3.56
2.41
2.22 2.40

Source: Company, HDFC sec Inst Research; * Adjusted for subsidiary

Page | 8

MMFS : RESULTS REVIEW 2QFY16

Income Statement
(Rs mn)
Interest Earned
Interest Expended
Net Interest Income
Other Income
Total Income
Total Operating Exp
PPOP
Provisions & Contingencies
PBT
Provision for Tax
PAT

Balance Sheet
FY13
22,329
14,110
8,219
3,228
11,447
5,696
5,751
1,243
4,508
1,444
3,065

Source: Company, HDFC sec Inst Research

FY14
28,997
17,711
11,286
3,632
14,918
6,582
8,336
2,834
5,502
1,862
3,640

FY15
33,366
19,604
13,762
3,545
17,307
7,489
9,818
3,247
6,571
2,221
4,350

FY16E
37,126
21,223
15,902
4,099
20,001
8,498
11,503
3,650
7,853
2,631
5,222

FY17E
42,570
24,063
18,507
4,852
23,359
9,612
13,747
4,061
9,687
3,245
6,442

FY18E
49,712
28,156
21,556
5,582
27,138
10,805
16,333
4,957
11,377
3,641
7,736

(Rs mn)
SOURCES OF FUNDS
Share Capital
Reserves and surplus
Shareholders funds
Borrowings
Other Liabilities
Total liabilities

FY13

FY14

FY15

FY16E

FY17E

FY18E

1,432
1,433
1,437
1,560
1,560
1,560
18,216 21,514 25,289 34,564 39,988 46,366
19,648 22,947 26,727 36,124 41,548 47,926
152,890 180,932 194,752 219,358 257,141 311,673
9,310 11,589 12,247 16,369 19,233 21,837
181,848 215,468 233,726 271,851 317,923 381,436

APPLICATION OF FUNDS
Advances
Investments
Fixed assets
Other Assets
Total assets

166,259 194,281 221,835 253,327 297,742 358,525

2,245
824
675
776
892
1,026
707
729
683
786
904
1,039
12,637 19,634 15,539 16,962 18,384 20,845
181,848 215,468 238,732 271,851 317,923 381,436

Source: Company, HDFC sec Inst Research

Page | 9

CIFC : RESULTS REVIEW 2QFY16

Key Ratios
Valuation Ratios
EPS
Earnings Growth (%)
BVPS
Adj. BVPS
ROAA (%)
ROAE (%)
P/E (x)
P/ABV (x)
P/PPOP (x)
Dividend Yield (%)
Profitability
Yield on Advances (%)
Cost of Funds (%)
Core Spread (%)
NIM (%)
Operating Efficiency
Cost/Avg. Asset Ratio (%)
Cost-Income Ratio
Balance Sheet Structure
Ratios
Loan Growth (%)
Borrowing Growth (%)
Equity/Assets (%)
Equity/Loans (%)

FY13

FY14

FY15

FY16E

FY17E FY18E

21.4
64.5
137.2
134.2
1.9
18.1
28.1
4.5
15.0
0.6

25.4
18.7
160.2
148.0
1.8
17.1
23.7
4.1
10.3
0.6

30.3
19.1
185.9
162.9
1.9
17.5
19.9
3.7
8.8
0.6

33.5
10.6
231.5
186.5
2.0
16.6
18.0
3.2
8.2
0.8

41.3
23.3
266.3
219.6
2.2
16.6
14.6
2.7
6.8
0.9

49.6
20.1
307.2
259.0
2.2
17.3
12.1
2.3
5.8
1.2

13.8
10.6
3.2
5.1

13.7
10.6
3.1
5.3

13.7
10.4
3.3
5.7

13.7
10.3
3.4
5.9

13.6
10.1
3.5
5.9

13.3
9.9
3.4
5.8

FY13
Asset Quality
Gross NPLs (Rs mn)
Net NPLs (Rs mn)
Gross NPLs (%)
Net NPLs (%)
Coverage Ratio (%)
Provision/Avg. Loans (%)
RoAA Tree
Net Interest Income
Non Interest Income
Operating Cost
Provisions
Tax
ROAA
Leverage (x)
ROAE

FY14

FY15

FY16E

FY17E

FY18E

1,975.8 4,358.6 8,027.6 12,090.6 15,225.5 19,148.5

437.0 1,738.0 5,234.8 7,022.9 7,289.6 7,517.4
1.0
1.9
3.1
4.2
4.5
4.7
0.2
0.8
2.0
2.4
2.2
1.8
77.9
59.7
34.9
41.9
52.1
60.7
0.65
1.22
1.28
1.27
1.20
1.22
5.20% 5.68% 6.13% 6.29% 6.28%
2.04% 1.83% 1.58% 1.62% 1.65%
3.60% 3.31% 3.33% 3.36% 3.26%
0.79% 1.43% 1.45% 1.44% 1.38%
0.91% 0.94% 0.99% 1.04% 1.10%
1.94% 1.83% 1.94% 2.07% 2.18%
9.35
9.33
9.04
8.04
7.59
18.12% 17.09% 17.52% 16.62% 16.59%

6.16%
1.60%
3.09%
1.42%
1.04%
2.21%
7.82
17.29%

Source: Company, HDFC sec Inst Research

3.6
49.8

3.3
44.1

3.3
43.3

3.3
42.5

3.3
41.1

3.1
39.8

41.1
33.6
10.8
10.3

22.4
18.3
10.6
9.9

9.5
7.6
11.4
10.5

13.1
12.6
13.3
12.5

17.5
17.2
13.1
12.3

20.4
21.2
12.6
11.8

Page | 10

CIFC : RESULTS REVIEW 2QFY16

RECOMMENDATION HISTORY
Cholamandalam Invest.

Date
07-Oct
27-Oct

TP

Oct-15

Sep-15

Aug-15

Jul-15

Jun-15

May-15

Apr-15

Mar-15

Feb-15

Jan-15

Dec-14

Nov-14

Oct-14

800
750
700
650
600
550
500
450
400

CMP
641
602

Reco
BUY
BUY

Target
728
718

Rating Definitions
BUY
: Where the stock is expected to deliver more than 10% returns over the next 12 month period
NEUTRAL : Where the stock is expected to deliver (-)10% to 10% returns over the next 12 month period
SELL
: Where the stock is expected to deliver less than (-)10% returns over the next 12 month period

Page | 11

CIFC : RESULTS REVIEW 2QFY16

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Page | 12