RESULTS REVIEW 1QFY17

1 AUG 2016

Cholamandalam Investment & Finance

BUY
INDUSTRY
CMP (as on 1 Aug 2016)
Target Price

NBFCs
Rs 1,152
Rs 1,208

Nifty

8,637

Sensex

28,003

KEY STOCK DATA

Bloomberg

CIFC IN

No. of Shares (mn)

156

MCap (Rsbn) / ($ mn)

180 / 2,695

6m avg traded value (Rsmn)

146

STOCK PERFORMANCE (%)

52 Week high / low

Rs 1,173/570

3M

6M

12M

Absolute (%)

44.2

78.3

66.9

Relative (%)

34.8

65.5

67.3

SHAREHOLDING PATTERN (%)

Promoters

53.13

FIs & Local MFs

10.48

FIIs

16.76

Public & Others

19.63

Source : BSE

Darpin Shah
darpin.shah@hdfcsec.com
+91-22-6171-7328
Parul Gulati
parul.gulati@hdfcsec.com
+91-22-6639-3035
Siji Philip
siji.philip@hdfcsec.com
+91-22-6171-7324

Momentum building up
CIFCs 1Q earnings were a mixed bag. Its Vehicle
Finance (VF) segment continues to deliver strong
performance across parameters - disbursements
(+29%), AUM (+17%), GNPAs (-3% QoQ, despite a
seasonally weak quarter) and pre-tax RoA of 3.1%
(highest in 12 quarters). However, the Home Equity
(HE) business saw stress with drop in NIM (-60bps
QoQ), rise in NPL (15% QoQ) and pre-tax RoA of 2.6%
(-60bps QoQ, lowest in 20 qtrs) though disbursals
(+19%) and book growth (+20%) remained steady.
At 4.1xFY18E, CIFC trades at premium valuations vs.
peers. However, we continue to remain positive on
CIFC given its well-diversified geographic mix,
balance between cyclical VF business and steady HE
business. The recent rating upgrade, favourable
interest rate regime and improving leverage will
continue to drive ROAAs to 2.6% by FY19E. Further
provisions (avg. 1.02%) assumptions provide upside
risk to the RoAA improvement. Maintain BUY with a
revised TP of Rs 1,208 (3.5x Mar-19E ABV of Rs 345).

Highlights of the quarter

Strong disbursals (+30% YoY) were led by 29% rise

in VF segment and ~19% in the HE business. With

sequentially lower repayments, AUM grew ~18%
YoY (eight quarter high). With strong presence
across geographies, segments and a widespread
network, we expect AUM CAGR of 22%.

Calc. NIMs (7.3%) were sequentially impacted due

to income reversals (Rs 300mn on the securitised
book) and lower recoveries. The recent rating
upgrade, higher proportion of bank borrowings
and ~67% AUM at fixed rate augurs well for NIM.

GNPAs (Rs 11bn, 3.6%) grew a mere 5.4% led by

~15% jump in HE business (3.8% vs. 3.5% QoQ and

2.3% YoY). However, GNPAs in VF declined to 3.5%
(vs. 3.7/3.8% QoQ/YoY). With improving earnings
profile, gradual macro improvement, we expect
asset quality to remain stable. However shift to
90DPD will optically elevate NPAs.

Financial Summary
(Rs mn)
Net Interest Income
PPOP
PAT
EPS (Rs)
ROAE (%)
ROAA (%)
Adj. BVPS (Rs)
P/ABV (x)
P/E (x)

1QFY17
5,536
3,340
1,657
10.6

1QFY16
4,863
2,774
1,103
7.7

YoY (%)
13.8
20.4
50.3
38.3

4QFY16
5993.7
3,948
1,920
12.3

QoQ (%)
(7.6)
(15.4)
(13.7)
(13.8)

FY16
17,372
12,980
5,685
36.4
18.0
2.20
194.1
5.94
31.7

FY17E
19,957
14,812
7,111
45.5
18.0
2.34
224.8
5.12
25.3

FY18E
23,890
17,857
9,188
58.8
19.8
2.52
280.7
4.10
19.6

FY19E
28,560
22,154
11,543
73.9
20.9
2.59
345.0
3.34
15.6

Source: Company, HDFC sec Inst Research

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

CIFC: RESULTS REVIEW 1QFY17

Disbursements (Rs 45.6bn) grew 30% (-8% QoQ)

led by 29% growth in the VF segment (Rs 33bn).

The strong growth was driven across segments.
On sequential basis, HCV dipped 27%, used CV
fell 14% and tractors & cars/3W disbursals
declined ~12% each. HE disbursements were
steady with ~19% YoY (flat QoQ) growth. On
small base other segments (HL, MSME and Agri)
grew ~2.7x YoY and 30% QoQ. We have factored
in disbursements CAGR of 21% over FY16-18E
given improving macros and better collection
trends we expect VF disbursements to sustain
and HE to improve gradually.

Higher overall repayment trends (~12% of the

opening AUM), especially in the HE business

(8.4% of opening book vs. 5.4% QoQ and 5.9%
YoY), led to AUM growth of ~18% YoY to Rs
308bn. HE AUM grew ~20% to Rs 92.5bn (302%
of AUM); VF AUM ~17% to Rs 208bn (67.5% of
AUM).
With
strong
presence
across
geographies, segments and a widespread
network, we expect AUM CAGR of 22% over
FY16-19E.

Calc. yields at 14.5% declined 72/113bps

YoY/QoQ led by 80/60bps YoY/QoQ decline in

the HE business and 30/70bps decline in the VF
segment. The decline in both segments was led
by lower recoveries and higher reversals due to
interest reversals (Rs 300mn). However,

47/10bps decline in CoF provided some cushion.

With 67% AUM at fixed rate, bank borrowings at
47%, rise in relatively lower cost CPs and the
recent rating upgrade will be NIM accretive in
the near term. Despite the favourable interest
rate scenario, we expect calc. NIM to remain
stable at ~5.9% over FY17-18E.

Operating expenses were controlled with a 6.5%

YoY growth (+8.5% QoQ), led by ~12% YoY
decline in other opex. In 1QFY16, CIFC provided
Rs 210mn as VAT towards reposed vehicles.
However, Staff cost jumped +26% YoY and
depreciation (towards Tablets) increased 42%
YoY. On sequential basis the other opex jumped
~26%. With improving business traction, better
collections we expected opex growth to remain
under control. We expect C-AA to decline
~40bps over FY16-19E to 2.9%.

Aggregate provision of Rs 804mn (1.06% ann. vs.

1.36% QoQ and 1.66% YoY) was 25/19% lower

YoY/QoQ. The cushion was largely led by VF
provisions (down 90/30bps YoY/QoQ) even as
the HE provisions were higher at 80bps
(40/10bps YoY/QoQ). In 4Q, CIFC has made
additional provision of Rs 540mn towards the
shift to 90DPD, thus providing cushion in coming
quarters. Despite this, we factor in LLP of an
average 1.02% over FY16-19E, while considering
PCR improvement.

Page | 2

CIFC: RESULTS REVIEW 1QFY17

Five Quarters At A Glance

(Rs mn)
Net Interest Income
Non-interest Income
Total Income
Operating expenses
Pre Provision 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

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

3QFY16
5,382
48
5,430
2,151
3,279
1,070
2,209
752
1,457

4QFY16
5,994
41
6,034
2,086
3,948
986
2,962
1,041
1,920

1QFY17
5,536
68
5,604
2,264
3,340
804
2,537
880
1,657

YoY Growth QoQ Growth

13.8%
-7.6%
74.0%
67.5%
-7.1%
14.3%
6.4%
8.5%
20.4%
-15.4%
-24.8%
-18.5%
48.8%
-14.4%
46.0%
-15.5%
-13.7%
50.3%

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

42.6
32.5
8.8
280.0
188.9
84.8
248.4
31.6
220.8
105.4
20.1
13.5

49.4
37.6
9.9
298.1
201.0
90.1
254.9
43.3
225.8
111.2
19.7
13.3

45.6
33.3
9.9
308.3
208.2
92.5
267.2
41.1
239.5
112.5
18.7
13.3

30.0%
28.5%
19.3%
18.3%
16.8%
20.4%
15.5%
40.2%
16.2%
11.6%
-183 bps
-8 bps

-7.7%
-11.5%
-0.3%
3.4%
3.6%
2.6%
4.8%
-5.0%
6.1%
1.2%
-95 bps
8 bps

15.3
9.9
5.4
7.6
43.4
35.3

15.3
9.9
5.4
7.6
41.2
34.2

15.3
9.6
5.7
7.8
39.6
34.1

15.7
9.5
6.1
8.3
34.6
35.2

14.5
9.4
5.1
7.3
40.4
34.7

-72 bps
-47 bps
-25 bps
-25 bps
-302 bps
-66 bps

-113 bps
-12 bps
-101 bps
-99 bps
582 bps
-48 bps

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

12,042
7,841
4.3
2.8
34.9
4.7
3.5

10,525
6,261
3.5
2.1
40.5
3.7
3.5

11,097
6,473
3.6
2.1
41.7
3.5
3.8

29.0%
19.4%
30 bps
2 bps
470 bps
-34 bps
152 bps

5.4%
3.4%
7 bps
0 bps
116 bps
-15 bps
30 bps

Below estimates with decline in NIMs,

especially in HE segment
Driven by other opex (+26% QoQ) and
Staff cost was higher 25% YoY

Led by sharp drop in HCV (27%), Used

CV (14%) and ~12% each in tractors &
cars; Only LCV reported growth (1%)
With higher repayments (~12%),
especially in HE segment, AUM growth
was restricted at 18%; HE forms ~30%
of AUM
Break up : Bank - 47%, NCDs 27%, CPs
~10%
Lower recoveries, higher reversals led
to sharp drop, especially in HE
segment
HE segment NIM at 4.5% down 60bps
QoQ and VF NIM at 8.1% down 40bps
Led by HE segment (+15% QoQ); VF
declined ~2.3% QoQ

Page | 3

CIFC: RESULTS REVIEW 1QFY17

73%

1QFY17

22%

20%
76%

4QFY16

21%
76%

3QFY16

21%
76%

2QFY16

24%
74%

1QFY16

24%
73%

4QFY15

74%

3QFY15

24%

24%
72%

2QFY15

73%

1QFY15

22%

21%
76%

4QFY14

21%
78%

3QFY14

23

26

24

24

23

23

22

23

23

23

10

11

13

14

16

16

17

14

27

35

35

34

31

34

34

34

31

32

32

32

31

29

27

25

24

23

22

21

21

24

22

21

21

24

1QFY16

2QFY16

3QFY16

4QFY16

1QFY17

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

24%
76%

2QFY14

20%
80%

21

-20

HE Disbursements: 19% YoY Growth

AUM: Led By HE (+20% YoY) and VF (+4% QoQ)

Growth YoY (%) - RHS

AUM (Rs bn)

Growth (YoY %) RHS

12.5

40.0

400

50

10.0

30.0

300

40

20.0

200

10.0

100

10

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

20

4QFY14

5.0

30

3QFY14

7.5
2.5

With improving disbursements

trends, we have factored in
AUM growth of 22% CAGR
over FY16-19E

20

4QFY15

25

3QFY15

10.0

Car & 3 wheelers

2QFY15

20

Tractors

1QFY15

20.0

HCV

4QFY14

40

Used CV

3QFY14

30.0

LCV

2QFY14

60

Home Equity Disbursement (Rs bn)

Others

1QFY14

Growth (YoY %)

40.0

1QFY14

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

Vehicle Finance Disbursement Rs bn (LHS)

Home Equity

Segment-wise VF Disbursements

2QFY14

HE AUM grew ~20/3%

YoY/QoQ and CF AUM grew
~17/4% YoY/QoQ

VF Disbursements: Growth Across Segments

1QFY14

With higher repayment trend

AUM growth was restricted at
18/3% YoY/QoQ

Vehicle Finance
50.0
40.0
30.0
20.0
10.0
-10.0

3QFY14

With improving macros and

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

Disbursements Business-wise

YoY Growth (%)

60.0
50.0
40.0
30.0
20.0
10.0
0.0

2QFY14

Sequential de-growth in the

VF segment was due to HCV (27%), used CV (-14%) and
~12% decline each in tractors
and cars/3W; only LCV
disbursals were flat QoQ

Disbursements Rs bn - RHS

1QFY14

Other segments (HL, MSME

and Agri) disbursals grew 2.7x
YoY and 30% QoQ

Disbursements: +30% YoY And Down 7.7% QoQ

1QFY14

Disbursements up 30% YoY led

by ~29% YoY growth in the VF
segment and 19% YoY in HE
disbursements

Source : Company, HDFC sec Inst Research

Page | 4

CIFC: RESULTS REVIEW 1QFY17

Vehicle finance

Vehicle AUM Rs bn

250

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

LCV

Used CV

1QFY17

4QFY16

3QFY16

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

Segment-wise VF AUM

2QFY16

1QFY16

4QFY15

0%

3QFY15

10.0

2QFY15

50

1QFY15

20%

4QFY14

20.0

76 75 74 73 72 71 70 69 68 68 67 67 68

3QFY14

100

State-wise VF AUM
HCV

Tractors

Haryana Other
3%
states 8%

Car & 3W

100%

TN 8% AP (incl.
Telangana)
8%

KTK 5%

80%

Orissa 4%

60%

Mah 12%

UP 6%

40%

Delhi 3%
WB 5%
MP 6%
Kerala 4%
Punjab 5%

1QFY17

20.0

10.0

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

CC/WCDL

50%

0%

1QFY17

20.0

Sub debt

4QFY16

40.0

CPs

3QFY16

30.0

2QFY14

Raj 11%

2QFY16

60.0

Debentures

1QFY16

40.0

Bank loans
100%

4QFY15

80.0

1QFY14

Guj 5%

3QFY15

50.0

2QFY15

100.0

Chattisgarh
7%

Borrowings : Bank Borrowings Form 47%

YoY % (RHS)

1QFY15

Home Equity AUM (Rs bn)

1QFY14

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

Home Equity AUM: Steady Growth Continues

4QFY14

40%

2QFY14

30.0

1QFY14

150

60%

0%

As ~47% of its total

borrowings are from bank,
CIFC will benefit from the
decline in rates

50.0
40.0

20%

With higher repayments

(8.4% of opening AUM) vs.
5.4% QoQ and 5.9% YoY, HE
AUM growth was restricted
at 20/3% YoY/QoQ

YoY (%, RHS)

200

80%

3QFY14

The vehicle finance portfolio

remains well diversified
across geographies

VF AUM: Jumps 4% QoQ and 17% YoY

Others

2QFY14

In the VF segment, HCV (16%)

share jumped 200bps QoQ

Home equity

100%

1QFY14

Repayment rates moderated

in VF segment to ~13% (of
opening AUM) vs. 13.5% QoQ
and 13.6% YoY

AUM Break-up: HE Proportion Stable QoQ

2QFY14

HE AUM proportion remains

stable QoQ at ~30%

Source : Company, HDFC sec Inst Research

Page | 5

CIFC: RESULTS REVIEW 1QFY17

Yields And NIM Decline In The Both Business

Efficiency Ratio: Scope For Improvement

C-I

C-AA - RHS

3.0

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

Vehicle Finance (% RHS)

Home Equity Finance (% LHS)

4.0

2.0
1.5

3.5

1.0

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2.0
-

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

4.0
5.0

2QFY15

1.0

6.0

1QFY15

2.0

Home Equity (LHS)

Home Equity (%)

Rs bn

4QFY14

3.0

10.0

3QFY14

90.0
80.0
70.0
60.0
50.0
40.0
30.0

4.0

2QFY15

Vehicle Finance (LHS)

Vehicle Finance (%)

PCR (%. RHS)

2QFY14

NNPA %

1QFY15

Segmental Asset Quality

5.0

4QFY14

3.0

1QFY14

Asset Quality Stable QoQ

GNPA %

0.5

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

2.0

1QFY14

32.0

3QFY14

PCR jumped +115bps QoQ to

41.7%

3.0

2.5

2QFY14

With improving growth

trends and controlled opex,
we expect C-AA to decline to
2.9% by FY19E from 3.3% in
FY16

10.0

4.0
3.5

42.0

1QFY14

Expense ratio in HE and VF

remains steady QoQ

5.0

12.0

Segmental Expenses Ratio

37.0

Sequentially lower NIM and

~9% growth in opex led to
deterioration in efficiency
ratio (C-AA jumped 10bps
QoQ)

7.0

14.0

2QFY14

47.0

16.0

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

14.0

HE Yields - RHS
HE NIMs
%
9.0

2QFY15

14.5

1QFY15

15.0

18.0

4QFY14

15.5

VH Yields - RHS
VH NIMs

3QFY14

11.0
10.0
9.0
8.0
7.0
6.0
5.0

2QFY14

NIMs
%

1QFY14

16.0

Cost

1QFY14

While decline in CoF and fixed

rate VF book provide comfort
on margins, we have factored
in stable NIM over next two
years

Yields - LHS

2QFY14

HE NIM dipped 60bps QoQ to

4.5%, while VF NIM fell to
~8.1%, down 40bps

NIM: Decline Led By Higher Reversals

1QFY14

NIM fell ~100bps QoQ to

7.3% led by a sharp lower
recoveries and higher interest
reversals, though marginal
decline in CoF provided
cushion

Source : Company, HDFC sec Inst Research

Page | 6

CIFC: RESULTS REVIEW 1QFY17

Provisions Declined QoQ

1.0

1.5
1.0
0.5

4QFY16

1QFY17

4QFY16

1QFY17

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

1QFY14

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

VF: GNPA And Pre-tax RoAA

HE: GNPA And Pre-tax RoAA

Pre-tax RoAA %

6.0
5.0
4.0
3.0
2.0
1.0
-

Home Equity

2.0

Pre-tax RoAA %

GNPA (%)

GNPA (%)

4.0
3.0
2.0
1.0

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

1QFY14

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

2QFY15

1QFY15

4QFY14

3QFY14

2QFY14

RoAA Improvement Driven By Better Margins

NII
Provisions

Other income
Tax

Opex
RoA (RHS)

10.0

2.9

5.0

2.4

1.9

-5.0

1QFY17

4QFY16

3QFY16

2QFY16

1QFY16

4QFY15

3QFY15

1.4

2QFY15

-10.0

1QFY15

Over FY16-19E, we expect

RoAA to inch up to 2.6%
driven by improvement in
efficiency, coupled with a
stable NIM

4QFY14

Led by lower NIM and rise in

opex, RoAA declined ~50bps
QoQ, though cushioned by
30bps decline in provisions

0.5

Vehicle Finance

3QFY14

500

2.5

2QFY14

1,000

3QFY14

HE business pre-tax RoAA

dipped 60bps QoQ to 2.6%

1.5

1QFY14

With decline in NIM and

provisions, VF pre-tax RoAA
inched up to 3.1%, +10bps
QoQ

2.0

1QFY14

We conservatively factor in
LLP of avg. 1.02% over FY1619E, while considering PCR
improvement

% of AUM (annu.)

1,500

Decline in provisions is largely

driven by VF segment (1.3%
vs. 1.6% QoQ and 2.2% YoY)
HE provisions jumped
~40/10bps YoY/QoQ to 80bps

Segmental Provisions: VF Providing Cushion

Provisions Rs mn - RHS

2QFY14

Provisions declined 25/19%

YoY/QoQ to ~1.06% ann. vs.
1.36% QoQ and 1.66% YoY.
CIFC made an additional
provision of Rs 540mn for the
shift to 90DPD in 4Q.

Source : Company, HDFC sec Inst Research

Page | 7

CIFC: RESULTS REVIEW 1QFY17

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

Old
19,914
14,769
7,082
225

FY17E
New
19,957
14,812
7,111
225

FY18E
19.6
21.6
12.7
19.3
16.9
18.0

P/ABV (x)
FY16E FY17E
5.94
5.12
4.24
3.86
2.98
2.55
3.87
3.80
3.03
2.81
3.27
2.95

Change
0.2%
0.3%
0.4%
0.1%

Old
23,644
17,747
8,974
279

FY18E
New
23,890
17,857
9,188
281

Change
1.0%
0.6%
2.4%
0.7%

Source: Company, HDFC sec Inst Research

Peer Valuations
NBFC

MCap
(Rs bn)

CMP
(Rs)

Rating

TP
(Rs)

Chola
CAFL
LICHF
MMFS
SCUF
SHTF

180
68
264
192
130
295

1,152
750
522
341
1,971
1,299

BUY
BUY
NEU
BUY
BUY
BUY

1,208
715
547
340
1,896
1,434

ABV (Rs)
FY16E FY17E
194
225
177
194
175
205
86
88
651
701
397
440

FY18E
281
217
238
111
760
478

P/E (x)
FY16E FY17E
31.7
25.3
41.2
28.4
15.9
14.6
27.9
24.1
24.5
19.8
25.0
20.4

FY18E
4.10
3.46
2.19
3.01
2.59
2.72

ROAE (%)
FY16E FY17E
18.0
18.0
10.1
13.4
19.6
18.3
11.4
12.2
12.2
13.4
12.2
13.5

FY18E
19.8
15.5
18.2
13.8
14.0
13.7

ROAA (%)
FY16E FY17E FY18E
2.20
2.34
2.52
1.32
1.50
1.63
1.37
1.28
1.28
1.80
1.83
1.96
2.72
2.88
2.86
1.85
1.99
1.97

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

Page | 8

CIFC: RESULTS REVIEW 1QFY17

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

Source: Company, HDFC sec Inst Research

FY16
37,880
20,508
17,372
4,057
21,429
8,449
12,980
4,272
8,708
3,023
5,685

FY17E
43,992
24,035
19,957
4,470
24,427
9,615
14,812
4,120
10,693
3,582
7,111

FY18E
52,921
29,031
23,890
5,110
29,000
11,143
17,857
4,346
13,511
4,324
9,188

FY19E
63,976
35,416
28,560
6,368
34,928
12,774
22,154
5,178
16,976
5,432
11,543

(Rs mn)
SOURCES OF FUNDS
Share Capital
Reserves
Net worth
Borrowings
Other Liabilities
Total liabilities

FY15

FY16

FY17E

FY18E

FY19E

1,437
30,297
31,734
194,752
12,246
238,732

1,562
35,012
36,574
225,762
16,547
278,883

1,562
41,041
42,603
274,970
11,796
329,369

1,562
48,777
50,339
336,200
13,593
400,132

1,562
58,430
59,992
417,332
14,975
492,299

APPLICATION OF FUNDS
Advances
Investments
Fixed assets
Other Assets
Total assets

221,835
675
683
15,539
238,732

259,101
666
1,113
18,003
278,883

309,342
766
1,280
17,982
329,369

378,225
880
1,472
19,555
400,132

469,499
1,012
1,693
20,095
492,299

Source: Company, HDFC sec Inst Research

Page | 9

CIFC: RESULTS REVIEW 1QFY17

Key Ratios
Valuation Ratios
EPS (Rs)
Earnings Growth (%)
BVPS (Rs)
Adj. BVPS (Rs)
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 (%)

FY15

FY16

FY17E

FY18E

FY19E

30.3
19.5
185.9
162.9
1.9
17.5
38.1
7.1
16.9
0.3

36.4
30.7
234.1
194.1
2.2
18.0
31.7
5.9
13.9
0.4

45.5
25.1
272.7
224.8
2.3
18.0
25.3
5.1
12.2
0.5

58.8
29.2
322.3
280.7
2.5
19.8
19.6
4.1
10.1
0.7

73.9
25.6
384.0
345.0
2.6
20.9
15.6
3.3
8.1
0.9

13.7
10.4
3.3
5.7

13.7
9.8
4.0
6.3

13.3
9.6
3.7
6.0

13.2
9.5
3.7
5.9

12.9
9.4
3.5
5.8

FY15
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

FY18E

FY19E

8,027.6 10,435.2 14,110.3 15,482.9

5,234.8 6,261.1 7,481.7 6,486.8
3.1
3.5
3.9
3.5
2.0
2.1
2.1
1.5
34.9
40.0
47.0
58.1
1.28
1.43
1.14
0.98

17,571.9
6,096.7
3.2
1.1
65.3
0.94

6.06%
1.56%
3.30%
1.43%
0.98%
1.92%
8.31
15.91%

FY16

6.71%
1.57%
3.26%
1.65%
1.17%
2.20%
7.58
16.64%

FY17E

6.56%
1.47%
3.16%
1.35%
1.18%
2.34%
7.68
17.96%

6.55%
1.40%
3.05%
1.19%
1.19%
2.52%
7.85
19.77%

6.40%
1.43%
2.86%
1.16%
1.22%
2.59%
8.1
20.92%

Source: Company, HDFC sec Inst Research

3.3
43.3

3.3
39.5

3.2
39.4

3.1
38.4

2.9
36.6

9.5
7.6
13.3
10.5

17.1
15.9
13.1
12.3

21.3
21.8
12.9
11.8

22.3
22.3
12.6
11.4

24.1
24.1
12.2
10.9

Page | 10

CIFC: RESULTS REVIEW 1QFY17

RECOMMENDATION HISTORY
Cholamandalam Invest.

Date
7-Oct-15
27-Oct-15
1-Feb-16
8-Apr-16
2-May-16
8-Jul-16
1-Aug-16

TP

1,400
1,200
1,000
800
600

Jul-16

Jun-16

May-16

Apr-16

Mar-16

Feb-16

Jan-16

Dec-15

Nov-15

Oct-15

Sep-15

Aug-15

400

CMP
641
602
646
740
799
961
1,152

Reco
BUY
BUY
BUY
BUY
BUY
BUY
BUY

Target
728
718
758
778
917
973
1,208

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 1QFY17

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Page | 12