{"id":1162,"date":"2019-11-02T02:15:58","date_gmt":"2019-11-02T02:15:58","guid":{"rendered":"https:\/\/jobbinghood.com\/finance\/2019\/11\/02\/lt-finance-rating-retain-buy-with-revised-target-price-of-rs-130\/"},"modified":"2019-11-02T02:15:58","modified_gmt":"2019-11-02T02:15:58","slug":"lt-finance-rating-retain-buy-with-revised-target-price-of-rs-130","status":"publish","type":"post","link":"https:\/\/jobbinghood.com\/magazine\/2019\/11\/02\/lt-finance-rating-retain-buy-with-revised-target-price-of-rs-130\/","title":{"rendered":"L&#038;T Finance rating: Retain &#8216;buy&#8217; with revised target price of Rs 130"},"content":{"rendered":"<p> [ad_1]<br \/>\n<\/p>\n<div>\n<div class=\"article-image\">\n<figure><img fetchpriority=\"high\" decoding=\"async\" class=\"lazy lazy-hidden wp-image-1752348 size-full\" src=\"http:\/\/www.financialexpress.com\/wp-content\/plugins\/a3-lazy-load\/assets\/images\/lazy_placeholder.gif\" data-lazy-type=\"image\" data-src=\"https:\/\/images.financialexpress.com\/2019\/11\/money.jpg\" alt=\"l&amp;t, l&amp;t finance\" width=\"660\" height=\"440\" srcset=\"\" data-srcset=\"https:\/\/images.financialexpress.com\/2019\/11\/money.jpg 660w, https:\/\/images.financialexpress.com\/2019\/11\/money-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/11\/money-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/11\/money-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><noscript><img decoding=\"async\" class=\"wp-image-1752348 size-full\" src=\"https:\/\/images.financialexpress.com\/2019\/11\/money.jpg\" alt=\"l&amp;t, l&amp;t finance\" width=\"660\" height=\"440\" srcset=\"https:\/\/images.financialexpress.com\/2019\/11\/money.jpg 660w, https:\/\/images.financialexpress.com\/2019\/11\/money-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2019\/11\/money-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2019\/11\/money-401x267.jpg 401w\" sizes=\"(max-width: 660px) 100vw, 660px\"\/><\/noscript><span class=\"article-caption\">Annualised credit cost of 2.3% was also largely in line with expectations and similar to Q1FY20 credit cost.<\/span><\/figure>\n<\/div>\n<p>By HSBC Global Research<\/p>\n<p>Adjusted earnings higher on account of lower tax outgo: Adjusted profits at `650 crore were ~20% higher than our expectations on account of lower tax outgo for the quarter at an effective rate of 14%. However, reported profit for the quarter came in at Rs 175 crore on account of a one-time charge of `473 crore on account of change in opening deferred tax asset (DTA) due to transition to proposed lower corporate tax regime. Net operating income (+10% y-o-y\/+3% q-o-q) and pre-provisioning profit (+18% y-o-y\/+1% q-o-q) were in line with estimates. Annualised credit cost of 2.3% was also largely in line with expectations and similar to Q1FY20 credit cost.<\/p>\n<p>De-focused loan book drags growth: Assets under management (AUM) stood at `1 lakh crore, up 10% y-o-y and largely flat q-o-q; impeded by run-down of the de-focused loan book. Focused loan book grew 19% y-o-y led by a 24% y-o-y growth in rural and housing loans, respectively. Disbursements continued to decline across business segments leading to a 42% y-o-y drop in overall disbursements (largely flat q-o-q). Notably, micro-loans disbursements grew 25% q-o-q. We estimate an AUM growth CAGR of 9% between FY19-22e.<\/p>\n<p>Asset quality remains largely stable: Reported Gross Stage 3 (GS3) assets increased marginally at 6.0% vs 5.7% in Q1FY20 and provision coverage ratio stood at 54% vs 58% in Q1. Deterioration in the asset quality of the de-focused loan book largely accounted for the decline in overall asset quality. Additionally, GS3 % of rural business also rose to 3.6% vs 3.4% in Q1FY20. The management is confident of reversal in asset quality of the rural portfolio in the coming quarters on the back of a better-than-expected monsoon season. We believe asset quality movement remains a key monitorable given the high risk perception towards the wholesale mortgage segment.<\/p>\n<p>We adjust our FY20-22e earnings by -3% to 21% in order to factor in lower tax outgo going forward. We retain \u2018buy\u2019 with a revised TP of `130 (`120 previously) as valuations are undemanding.<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from BSE and NSE and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">Income Tax Calculator<\/a>, know market\u2019s <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-gainers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Gainers<\/a>, <a href=\"http:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-losers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Losers<\/a> &amp; <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/equity-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Equity Funds<\/a>. Like us on <a href=\" https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\" https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"https:\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/>[ad_2]<br \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>[ad_1] Annualised credit cost of 2.3% was also largely in line with expectations and similar to Q1FY20 credit cost. By HSBC Global Research Adjusted earnings higher on account of lower tax outgo: Adjusted profits at `650 crore were ~20% higher than our expectations on account of lower tax outgo for the quarter at an effective [&hellip;]<\/p>\n","protected":false},"author":348,"featured_media":1163,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-1162","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-markets"],"_links":{"self":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/1162","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/users\/348"}],"replies":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/comments?post=1162"}],"version-history":[{"count":0,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/posts\/1162\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media\/1163"}],"wp:attachment":[{"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/media?parent=1162"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/categories?post=1162"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jobbinghood.com\/magazine\/wp-json\/wp\/v2\/tags?post=1162"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}