Better Credit Business & Steady Capital Market May Help Beside Future Possibility Of Full Banking License
CMP: 58
Buy either sustained break out above 60-62 or in dips around 57-50
TGT: 75-82-105 (12M)
TGT:120 (24M)
TSL<48
Note: Consecutive closing below 48 for any reason, EDEL may fall up to 40, where it can be again accumulated for investment purpose (better buying average).
Some key points : (With inputs from Maybank Kim Eng research note)
Over the past few years EDEL has grown from an investment bank into a "quasi bank" with a wide range of credit service (NBFC, ARC, mortgages & structured loans, precious & agri commodity financing, Real Estate PE Fund etc).
Diversification provides scale and de-risks against earnings volatility of capital market (broking, asset management, life insurances products etc).
EDEL has stable & diversifies loan assets in a relatively high collateral coverage and lower NPL/NPA. Thus asset liability management (ALM) is well matched with minimal gaps and NIM is expected to remain comfortable.
The company has strong and in-depth management of high credibility and has consistent earning deliveries at 37% CAGR over FY:12-15 (in FY-15 it was around 45%).
Analysts are forecasting incremental EPS growth in the coming days for:
- 25% pa loan growth (due to expected overall economic recovery in FY-17).
- 20% pa growth from capital market (helped by stable & cyclical domestic financial market).
- Supporting by overall reduction in operating expenses and lower credit costs (dovish RBI).
Key risks:
Tight systemic liquidity or adverse interest rates hampering EDEL's ability to borrow from markets and any "dooms day" in global/domestic capital market (very low probability).
As par reports, EDEL is launching a $1 bn
reals estate fund tapping investors around the globe (Asia/EU/US) for
booming and growing Indian property markets (NCR, Mumbai, Pune,
Bangalore, Chennai etc). Such real estate funding was being done for the last few years mainly on account of the own balance sheet strength of EDEL itself.
Thus looking ahead, "smart city theme", "housing for all" initiatives by the Govt may also help EDEL in its credit business.
Some key metrics of EDEL Balance sheet as on 31/03/2015 (YOY): Consolidated Figure
Total debt: Rs.21680.80 cr / 12276.03
Debt/EQ Ratio: 6.87/4.50 *
Operating Profit:2399.08/1605.26
Reported Net Profit : 308.20/216.89
Current EPS (TTM): 4.21
* IIFL (Similar comparison): D/E 5.17 with 13222.99 cr debt and EPS 14.67
As par BG metrics (with relevant market trends):
Current median valuation of EDEL may be around: 75 (FY:15)
Projected fair valuations might be around : 85-105-120 (FY:16-18)
| SCRIP | EPS(TTM) | BV(Act) | P/E(AVG) | Low | High | Median | 200-DEMA | 10-DEMA |
| EDELWEISS | 4.21 | 38.93 | 20 | 70.89 | 70.12 | 70.51 | 59.68 | 58.4 |
| EDELWEISS | 6.15 | 43.01 | 20 | 85.68 | 84.75 | 85.22 | 59.68 | 58.4 |
| EDELWEISS | 8.95 | 47.55 | 20 | 103.36 | 102.24 | 102.80 | 59.68 | 58.4 |
| EDELWEISS | 13.75 | 55.75 | 18 | 121.54 | 120.22 | 120.88 | 59.68 | 58.4 |
Analytical Charts:
No comments:
Post a Comment