Crisil: Shriram City Union Finance LTD

CRISIL IERIndependentEquityResearch
Shriram City Union

Finance Ltd
Q2FY14 Results Update
Enhancing investment decisions
Explanation of CRISIL Fundamental and Valuation (CFV) matrix

The CFV Matrix (CRISIL Fundamental and Valuation Matrix) addresses the two important analysis of an investment making process Analysis
of Fundamentals (addressed through Fundamental Grade) and Analysis of Returns (Valuation Grade) The fundamental grade is assigned on a
five-point scale from grade 5 (indicating Excellent fundamentals) to grade 1 (Poor fundamentals) The valuation grade is assigned on a fivepoint scale from grade 5 (indicating strong upside from the current market price (CMP)) to grade 1 (strong downside from the CMP).
CRISIL
Fundamental Grade
Assessment
CRISIL
Valuation Grade
Assessment
5/5
Excellent fundamentals
5/5
Strong upside (>25% from CMP)
4/5
Superior fundamentals
4/5
Upside (10-25% from CMP)
3/5
Good fundamentals
3/5
Align (+-10% from CMP)
2/5
Moderate fundamentals
2/5
Downside (negative 10-25% from CMP)
1/5
Poor fundamentals
1/5
Strong downside (<-25% from CMP)
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Last updated: May, 2013
Analyst Disclosure
Each member of the team involved in the preparation of the grading report, hereby affirms that there exists no conflict of interest that can bias
the grading recommendation of the company.
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purpose.
Shriram City Union Finance Ltd

AUM growth muted; gold loan segment drove disbursements
Fundamental Grade
4/5 (Superior fundamentals)
November 6, 2013
Valuation Grade
3/5 (CMP is aligned)
Industry
Consumer Finance
Fair Value
CMP
Asset quality deteriorated marginally following a weak macro environment

Gross NPAs grew marginally by 17 bps to 2.46% in Q2FY14 following a weak macroeconomic environment. Hence, overall gross NPAs (150 days past due) grew 7% q-o-q to
3.8 bn. Credit costs declined by 9% q-o-q (down 20 bps to 2.4% of AUM), which led to PAT
increasing 8% q-o-q to 1,272 mn. Net NPAs were flat at 0.7% of AUM. The company
declared an interim dividend of 4 per share in Q2FY14.
Tier I capital improved on warrant conversion
In July 2013, the pending 3.05 warrants, out of 5.9 mn warrants issued in FY12, got
converted into shares (one share per warrant) at an exercise price of 570. Hence, tier I
capital increased by 278 bps q-o-q to 18.3%, taking the total capital adequacy ratio to 23.3%.
We had already factored in the warrant conversion in our model.
Earnings estimates largely maintained, fair value retained at 1,059
Following lower-than-expected AUM growth in H1FY14, we lower our FY14 AUM growth
estimates to 14.6% from 21.1%. On account of lower-than-expected provisions in H1FY14,
we lower provision estimates by 7% in FY14. Accordingly, we largely retain our FY14 PAT
estimates. We continue to value Shriram City using the P/B method. Our fair value is
maintained at 1,059 (1.9x FY15 adjusted book value and valuing housing subsidiary at book
value). At the current market price of 1,097 per share, our valuation grade is 3/5.
Excellent
Fundamentals
5
4
3
2
1
Poor
Fundamentals
6221/20929
SHRIRAMCIT/
SHRMCITY
10
59.3
59,537/968
1,230/755
0.2
62.4%
20,107
20.6
NSE/BSE ticker
Face Value ( per share)
Shares outstanding (mn)
Market cap ( mn)/(US$ mn)
52-week range () (H/L)
Beta
Free float (%)
Avg daily volumes (30-days)
Avg daily value (30-days) ( mn)
SHAREHOLDING PATTERN
100%
5.8%
13.1%
4.3%
12.6%
4.0%
25.1%
25.2%
26.2%
14.1%
90%
80%
70%
33.5%
3.0%
60%
25.9%
50%
40%
30%
55.0%
57.3%
57.3%
20%
37.6%
10%
Dec-12
FY12
FY13
FY14E
FY15E
11,238
16,441
18,536
23,811
Pre-provision profit
4,841
7,138
10,495
11,546
14,878
Adjusted net profit
2,406
3,425
4,496
4,995
6,425
49
67
81
85
110
Shriram City
12.8
13.0
13.5
12.8
10.0
CNX 500
2.6
2.7
2.9
2.3
1.9
RoE (%)
21.8
24.0
22.7
19.7
20.5
RoA (%)
3.0
3.0
3.1
2.9
3.1
0.4
0.4
0.4
0.3
0.2
20.8
17.0
18.6
21.3
19.6
NM: Not meaningful; CMP: Current market price
Mar-13
Promoter
FY11
Capital adequacy ratio (%)
Strong
Upside
NIFTY/SENSEX
8,082
Net NPA (%)
KEY STOCK STATISTICS
Total operating income
P/ABV (x)
Valuation Grade
( mn)
P/E (x)
0%
KEY FORECAST
EPS
Strong
Downside
Non-gold disbursements muted q-o-q while gold loan disbursements revived

Total disbursements grew by 9.0% q-o-q to 35.6 bn with gold loan disbursements increasing
82.9% q-o-q to 11 bn. Disbursements excluding gold loans declined by 8% q-o-q to 24 bn
owing to the political turmoil (Telangana issue) in Andhra Pradesh which hampered normal
business activities. SME (major AUM contributor) disbursements declined 9% to 13 bn.
Spreads rose marginally by 31 bps q-o-q to 8.7% because yields grew 37 bps q-o-q to 20.6%
owing to higher contribution from high-yielding SME loans (up by 300 bps q-o-q to 49%).
CFV MATRIX
Fundamental Grade
Shriram City Union Finance Ltds (Shriram Citys) Q2FY14 results were in line with CRISIL
Researchs expectations. Disbursements grew 9% q-o-q helped by 82.8% q-o-q increase in
gold loan disbursements as traders borrowed to increase supplies ahead of the festive
season. The overall disbursement growth was arrested by political disruptions in Andhra
Pradesh which impacted non-gold business segments. Andhra Pradesh constitutes 45-48%
of its total disbursements. Assets under management (AUM) declined by 1.8% q-o-q (down
5% y-o-y) to 151 bn. Following lower-than-expected AUM growth in H1FY14, we lower our
FY14 AUM growth estimates to 14.6% from 21.1%. We expect H2FY14 AUM growth to be
better than H1FY14 as we expect (i) the momentum in gold loans to continue in H2FY14 due
to higher gold prices and loan requirement from traders and (ii) non-gold business growth to
revive, as the management believes that business in AP will stabilise soon. We maintain our
fundamental grade of 4/5.
1,059
1,097
Jun-13
FII
DII
Sep-13
Others
PERFORMANCE VIS--VIS MARKET

Returns
1-m
3-m
6-m
12-m
-9%
2%
-6%
21%
5%
4%
1%
4%
ANALYTICAL CONTACT
Mohit Modi (Director)
Elizabeth John
Vishal Rampuria
mohit.modi@crisil.com
elizabeth.john@crisil.com
vishal.rampuria@crisil.com
Client servicing desk

+91 22 3342 3561
clientservicing@crisil.com
Source: Company, CRISIL Research estimates
For detailed initiating coverage report please visit: www.ier.co.in

CRISIL Independent Equity Research reports are also available on Bloomberg (CRI <go>) and Thomson Reuters.
Q2FY14 Results Summary (Standalone)

( mn)
Q2FY14
Q1FY14
Q2FY13
q-o-q (%)
y-o-y (%)
H1FY14
H1FY13
y-o-y (%)
9.8
Interest Income
7,846
7,884
7,594
(0.5)
3.3
15,730
14,320
Interest Expense
3,428
3,560
3,552
(3.7)
(3.5)
6,987
6,569
6.4
Net Interest Income
4,419
4,324
4,042
2.2
(19.5)
9.3
NM
8,743
7,751
314
13
12.8
NM
12.8
15.6
9,056
7,764
3,347
2,726
16.6
22.8
55.3
Non Interest Income
140
174
Total Operating Income
4,559
4,498
4,043
Operating Expenses
1,686
1,660
1,459
1.4
1.6
Staff Costs
631
649
476
(2.8)
32.6
1,280
824
Other Operating Expenses

Cost to income
1,055
38.6%
1,012
38.4%
983
37.6%
4.3
7.4
1,901
8.7
16 bps
96 bps
2,067
38.5%
36.5%
205 bps
Pre- provision profit (PPP)
2,873
2,837
2,584
924
11.2
(0.6)
5,038
1,010
1.2
(9.0)
5,710
919
1,929
1,805
13.3
6.8
1,954
1,827
1,660
63
17.7
16.5
3,233
68
6.9
7.4
3,781
73
141
105
1,881
1,760
1,597
518
17.7
17.5
3,128
585
6.9
4.0
3,640
609
1,194
1,015
Provisions and write offs

Profit before depreciation and tax
Depreciation On Fixed Assets
PBT
Provision for tax
Adjusted Net Profit
17.0
34.5
16.4
17.7
1,272
1,174
1,079
55.4
52.4
17.9
13.2
2,113
59.3
8.3
7.0
2,446
No of equity shares (mn)
59
52.4
15.7
13.2
Adj EPS ()
21.8
21.2
20.6
2.9
5.8
43.0
40.4
6.5
Source: Company, CRISIL Research
PAT increased 8% q-o-q and 18% y-o-y
20%
400
10%
200
y-o-y growth (RHS)
30%
20%
10%
0%
PAT
Q2FY14
Q1FY14
Q4FY13
-10%
Q3FY13
Q2FY13
Q2FY14
Q1FY14
Q4FY13
Q3FY13
Q2FY13
Q1FY13
Q4FY12
Q3FY12
0%
14%
18%
1,272
600
1,174
30%
40%
29%
1,257
800
29%
1,126
40%
26%
33% 35%
1,079
1,000
1,034
4,498
4,712
4,250
4,043
3,721
3,447
2,728
2,602
13%
1,200
50%
50%
42%
Q1FY13
21%
60%
46%
976
37%
4,559
43%
1,400
Q4FY12
55% 56%
Q2FY12
59% 60%
58%
70%
835
( mn)
Q2FY12
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Q3FY12
( mn)
811
Total operating income up 1.4% q-o-q and 13% y-o-y
y-o-y growth (RHS)
... largely due to 82.8% q-o-q increase in gold loan

Disbursements increased by 9% q-o-q...
disbursements
( bn)
43.5
40.7
32.7
35.6
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
Disbursements
-3%
15.0
5.0
25%
-3%
0%
-37%
-25%
-60%
22.5
26.0
25.6
24.8
24.1
15.3
6.1
-50%
-75%
11.1
-100%
Gold loan disbursements
q-o-q growth (RHS)
Q2FY14
45.1
10.0
-2%
Q1FY14
44.8
-10%
-20%
-30%
-40%
50%
16%
Q3FY12
45.9
Q1FY13
40.3
Q4FY12
-19.8%
20.0
100%
75%
Q4FY13
-2.3% 0.7% -3.7%

-6.3%
20%
10%
0%
25.0
83%
57%
Q3FY13
9.0%
30.0
Q2FY13
13.9%
50%
40%
30%
Q1FY13
40.7%
Q3FY12
50.0
45.0
40.0
35.0
30.0
25.0
20.0
15.0
10.0
5.0
-
Q4FY12
( bn)
q-o-q growth (RHS)
AUM declined by 1.8% q-o-q
Small business loans a major contributor to AUM
( bn)
180
160
13%
20%
16% 16%
15%
11%
140
7%
120
100
10%
3%
5%
80
-3%
60
-2%
-3%
0%
40
20
100
116
134
149
159
164
158
154
-5%
151
AUM
0.6%
4.2%
11.0%
0.6%
3.8%
11.3%
32.5%
35.8%
11.9%
11.6%
39.9%
36.9%
Q2FY13
Q2FY14
Q1FY14
Q4FY13
Q3FY13
Q2FY13
Q1FY13
Q4FY12
Q3FY12
Q2FY12
-10%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Q3FY13
0.7%
4.0%
13.2%
40.0%
12.1%
46.0%
49.0%
11.0%
10.0%
24.0%
22.0%
Q4FY13
Q1FY14
Q2FY14
Auto loans
Two-wheelers
Consumer durable loans
Proportion of off-book to total AUM up 158 bps q-o-q
Spreads increased by 31 bps q-o-q

25.0%
20.0%
83%
80%
86%
89%
88%
85%
88%
86%
19.0%
15.0%
19.7%
20.1%
12.1%
12.0%
7.6%
8.1%
Q2FY13
Q3FY13
10.4%
20.5%
20.2%
20.6%
11.3%
11.8%
11.9%
8.4%
8.7%
Q1FY14
Q2FY14
17%
20%
14%
11%
12%
15%
12%
14%
5.0%
Q4FY12
Q1FY13
Q2FY13
Q3FY13
Q4FY13
Q1FY14
Q2FY14
10.0%
Q3FY12
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
0.0%
4.0%
15.0%
30.0%
Gold loans
Small business loans
Personal loans
q-o-q growth (RHS)
1.0%
4.0%
14.0%
0.0%
Off book AUM
On book AUM
8.6%
Q1FY13
Yield on AUM
9.2%
Q4FY13
Cost of borrowings
Spread
Cost to income ratio remains flat q-o-q
Gross NPAs rose by 17 bps sequentially

3.0%
45%
39.6%
38.3%
40%
37.6%
35.9%
35.2%
38.4%
38.6%
36.4%
35.2%
2.0%
35%
1.5%
30%
2.19%
2.5%
0.5%
2.46%
1.72% 1.64%
1.57%
1.55% 1.46%
1.37%
0.80%
1.0%
25%
2.29%
0.41% 0.37% 0.38% 0.34% 0.32%
0.47%
0.67% 0.65%
Tier I capital rose by 278 bps q-o-q on warrant conversion
Trend in return ratios
24%
8%
Q2FY14
10%
4%
5%
0%
0%
3.4%
3.2%
Q2FY14
Q1FY14
Q4FY13
Q3FY13
Q2FY13
Q1FY13
Q4FY12
Q3FY12
15%
Capital adequacy ratio (RHS)
3.3%
3.1%
2.9%
2.8%
Share price movement
Fair value movement since initiation
300
3.0%
()
('000)
1,400
2,500
1,200
250
3.3%
ROE
350
3.1%
ROA
2,000
1,000
200
800
1,500
150
600
1,000
400
100
500
200
50
Shriram City
Total Traded Quantity (RHS)

Shriram City
-Indexed to 100
Source: NSE, CRISIL Research
Source: NSE, BSE, CRISIL Research
Oct-13
Aug-13
Jul-13
May-13
Apr-13
Feb-13
Jan-13
Nov-12
Oct-12
Jun-12
Aug-12
Mar-12
May-12
Jan-12
Dec-11
Oct-11
Jul-11
Aug-11
Oct-13
Jun-13
Oct-12
CNX 500
Feb-13
Jan-12
May-12
Sep-11
May-11
Jan-11
Sep-10
May-10
Jan-10
Sep-09
Jan-09
May-09
Sep-08
Jan-08
May-08
20.4% 20.2%
20%
Q2FY14
18.3%
0%
Tier II ratio
23.4%
12%
15.6%
13.7% 13.5% 12.6% 12.2% 12.5% 14.9%
Tier I ratio
22.7%
Q1FY14
4%
16%
3.7%
3.3%
23.1% 23.0%
Q4FY13
8%
3.2%
4.3%
24.6%
Q3FY13
12%
3.7%
23.9%
Q2FY13
3.5%
20%
24.4%
Q1FY13
2.8%
25%
Q4FY12
16%
4.9%
24%
Q3FY12
16.4% 16.9% 15.9%

15.5% 16.2%
19.9%
30%
Q2FY12
20%
18.6%
28%
Q1FY14
Net NPA
23.3%
Q4FY13
Gross NPA
28%
Q3FY13
Q2FY13
Q1FY13
Q4FY12
Q2FY12
Q2FY14
Q1FY14
Q4FY13
Q3FY13
Q2FY13
Q1FY13
Q4FY12
Q3FY12
Q2FY12
Q3FY12
0.0%
20%
CRISIL Fair Value
Segment-wise NPAs
Jun-12
Product segment
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Gross
Net
Gross
Net
NPA %
NPA %
NPA %
NPA %
NPA %
NPA %
NPA %
NPA %
NPA %
NPA %
NPA %
NPA %
Consumer durables
3.1%
0.6%
3.7%
0.0%
4.2%
0.0%
4.2%
0.0%
3.4%
0.0%
3.6%
0.0%
Two wheelers
3.2%
1.3%
3.5%
1.2%
3.6%
1.2%
3.7%
1.2%
3.8%
1.2%
3.8%
0.8%
Auto loans
3.2%
0.7%
3.8%
0.7%
3.6%
0.6%
3.5%
0.6%
3.3%
0.5%
3.7%
0.4%
Personal loans
4.1%
0.0%
4.2%
0.0%
4.4%
0.0%
4.5%
0.0%
4.8%
0.0%
4.8%
0.0%
Small enterprises finance
0.6%
0.3%
0.8%
0.4%
0.9%
0.4%
0.9%
0.3%
1.5%
0.5%
1.4%
0.3%
Total excluding gold loans
2.6%
0.6%
2.6%
0.6%
2.5%
0.6%
2.4%
0.6%
2.7%
0.6%
2.6%
0.4%
Gold loans
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.4%
0.3%
1.3%
1.1%
1.6%
1.4%
Total - including gold loans
1.5%
0.4%
1.5%
0.3%
1.4%
0.3%
1.6%
0.5%
2.2%
0.8%
2.3%
0.7%
Source: Company
Key takeaways from Q2FY14 conference call

AUM outlook
Excluding gold loans, AUM growth is expected to be 20% in FY14.
Overall AUM growth including gold loans can be around 20%.
Asset quality
The entire book remains under 150 days past due (dpd) NPA recognition norms.
Write-off during Q2FY14 was 761 mn compared to 825 mn in Q1FY14
Borrowings
Almost 49% of the liability is at a fixed rate of interest. The weighted average tenure of
liability is over 26 months.
In Q2FY14, the company securitised 6 bn at a weighted average rate of 8.38%.
Earnings Estimates Largely Maintained

FY14E
Particulars
FY15E
Unit
Old
New
% change
Old
New
% change
AUM
( bn)
192
181
-5.5
256
242
-5.3
Net Interest Income
( mn)
18,821
18,318
-2.7
24,872
23,561
-5.3
Non Interest income
( mn)
217
217
NM
250
250
NM
( mn)
19,039
18,536
-2.6
24,872
23,811
-4.3
Operating Expenses
( mn)
7,177
6,989
-2.6
9,366
8,933
-4.6
Pre-provision profit
( mn)
11,862
11,546
-2.7
15,505
14,878
-4.0
Provisions
( mn)
4,185
3,885
-7.2
5,499
4,969
-9.6
PAT
( mn)
5,005
4,995
-0.2
6,491
6,425
-1.0
EPS
86
85
-0.7
111
110
-1.1
Adjusted book value
474
475
0.1
581
580
-0.2
Source: CRISIL Research estimates
Reasons for changes in estimates

Line item
FY14
FY15
AUM
Following lower-than-expected AUM growth in H1FY14, we lower our FY14 AUM growth
AUM growth estimated at
estimates to 14.6% from 21.1%. We expect H2FY14 AUM growth to be better than
33% in FY15
H1FY14 as we expect (i) the momentum in gold loans to continue in H2FY14 due to higher
gold prices and loan requirement from traders and (ii) non-gold business growth to revive,
as the management believes that business in AP will stabilise soon.
Net interest income
Lowered on account of lower AUM growth estimates.
Provision and
On account of lower-than-expected provisions in H1FY14, we reduce our FY14 provision estimates by 7%.
contingencies
Net profit
Largely maintained
Valuation
Grade: 3/5
Our fair value is 1,059 (1.8x FY15E adjusted book value and valuing the housing subsidiary
at book value). At the current market price of 1,097 per share, our valuation grade is 3/5.
One-year forward P/B band
P/B movement
(Times)
()
3.0
1,800
1,600
2.5
1,400
1,200
+1 std dev
2.0
1,000
800
1.5
600
400
1.0
200
0.5
-1 std dev
Shriram City
2.0x
2.5x
Oct-13
Jun-13
Jan-13
Apr-12
Sep-12
Jul-11
1yr Fwd PB (x)
Dec-11
Oct-10
Mar-11
Jun-10
Feb-10
Sep-09
Dec-08
May-09
Mar-08
3.0x
Aug-08
Nov-07
0.0
Jul-07
Oct-13
Jun-13
Jan-13
Apr-12
Sep-12
Jul-11
Dec-11
Mar-11
Jun-10
1.5x
Nov-10
Feb-10
Sep-09
Dec-08
May-09
Mar-08
Aug-08
Jul-07
Nov-07
Median PB
CRISIL IER reports released on Shriram City Union Finance Ltd

Fundamental
Fair value
Valuation
CMP
grade
(on the date of report)
Date
Nature of report
grade
28-Jun-11
Initiating coverage
3/5
673
4/5
541
12-Aug-11
Q1FY12 result update
3/5
673
5/5
570
15-Nov-11
3/5
673
5/5
520
06-Mar-12
3/5
733
4/5
588
10-July-12
Detailed report
3/5
746
4/5
640
01-Aug-12
3/5
746
3/5
708
07-Nov-12
3/5
803
3/5
819
01-Mar-13
3/5
1,116
3/5
1,079
22-Apr-13
Detailed report
4/5
1,116
4/5
1,008
06-June-13
4/5
1,116
3/5
1,090
13-Aug-13
4/5
1,059
4/5
881
06-Nov-13
4/5
1,059
3/5
1,097
Annexure: Financials (Standalone)

Income Statement
( mn)
Net Interest Income
Non Interest Income
Ratios
FY11
8,054
FY12
11,108
FY13
16,326
FY14E
18,318
FY15E
23,561
( mn)
FY11
FY12
FY13
FY14E
FY15E
Spread Analysis
28
129
114
217
250
8,082
11,238
16,441
18,536
23,811
Operating Expenses
3,241
4,100
5,946
6,989
8,933
Net Interest Margin (NIM)
437
924
2,240
1,869
2,755
Return Ratios
Other Operating Expenses
2,804
3,176
3,706
5,121
6,178
ROA (%)
3.0%
3.0%
3.1%
2.9%
3.1%
4,841
7,138
10,495
11,546
14,878
ROE (%)
21.8%
24.0%
22.7%
19.7%
20.5%
Provision & Contingency
1,160
1,760
3,594
3,885
4,969
Growth ratios
Profit before depreciation and tax
3,681
5,379
6,901
7,662
9,909
Assets under Management (AUM)
53.4%
67.9%
17.8%
14.6%
33.6%
75
137
244
266
319
Disbursements
58.9%
75.4%
25.3%
14.1%
25.7%
PBT
3,606
5,242
6,657
7,396
9,590
Net Interest Income
31.3%
37.9%
47.0%
12.2%
28.6%
Provision for tax
1,200
1,717
2,160
2,400
3,165
Non Interest Income
-80.6%
366.7%
-11.6%
90.0%
15.0%
Adjusted Net Profit
2,406
3,425
4,496
4,995
6,425
28.7%
39.1%
46.3%
12.7%
28.5%
Operating Expenses
39.5%
26.5%
45.0%
17.6%
27.8%
Staff Costs
20.9%
111.5%
142.5%
-16.6%
47.4%
22.4%
47.5%
47.0%
10.0%
28.9%
Provision & Contingency
-0.5%
51.7%
104.3%
8.1%
27.9%
Adjusted Net Profit
31.8%
46.5%
27.5%
11.1%
28.6%
EPS
30.7%
38.6%
20.5%
5.2%
28.6%
Book Value
20.4%
34.7%
22.7%
19.6%
21.3%
Staff Costs
Depreciation On Fixed Assets
Balancesheet
( mn)
FY11
FY12
FY13
FY14E
FY15E
Share Capital
Equity share capital
495
524
554
585
585
Equity Share warrants
844
436
Reserves
11,605
15,859
21,382
27,675
33,689
Shareholders Funds
12,100
17,226
22,372
28,260
34,274
Yield on AUM
Cost of borrowings
73,698
97,633
128,553
141,479
185,258
Other Liabilities & Provisions
11,135
16,926
10,456
10,978
11,527
Deferred tax liability
Sources of funds
96,933
43
46
46
46
131,829
161,428
180,763
231,106
19.0%
20.8%
20.6%
20.6%
8.5%
10.8%
12.5%
12.4%
12.4%
12.2%
10.4%
11.2%
10.8%
11.1%
Asset Quality
Gross NPA (%)
1.9%
1.6%
2.1%
2.1%
2.0%
Net NPA (%)
0.4%
0.4%
0.4%
0.3%
0.2%
12.8
13.0
13.5
12.8
10.0
2.6
2.7
2.9
2.3
1.9
Valuation Data
P/e (x)
Borrowings
21.1%
P/ABV (x)
Key Parameters
Total AUM ( bn)
80
134
158
181
242
Disbursements ( bn)
79
139
174
199
250
Capitalisation ratios
Cash & Bank Balances
Investments
Net Loans and advances
Net Fixed Assets and Capital WIP
Deferred tax asset
Other Assets
Application of funds
21,654
13,277
22,705
24,322
28,300
Capital adequacy ratio (%)
20.8
17.0
18.6
21.3
19.6
53
176
1,174
1,760
2,128
Tier I capital ratio (%)
16.2
13.5
14.6
16.7
15.4
70,437
111,582
135,850
146,610
190,988
Tier II capital ratio (%)
4.6
3.5
4.0
4.7
4.2
274
512
872
993
1,219
38.9
158
175
235
235
235
4,357
6,106
592
6,844
8,237
96,933
131,829
161,428
180,763
231,106
Efficiency ratio
41.0
37.7
37.6
39.1
Opex/ average assets (%)
Cost to Income ratio (%)
4.1
3.7
4.2
4.2
4.5
Leverage (x)
6.1
5.7
5.7
5.0
5.4
Quarterly Financials
Per share
( mn)
FY11
FY12
FY13
FY14E
FY15E
49
67
81
85
110
Change (q-o-q)
Adj Book Value ()
238
321
384
475
580
PAT
Dividend per share ()
3.5
4.0
6.0
50
52
55
59
59
Adj EPS ()
Actual o/s shares
Source: CRISIL Research
Change (q-o-q)
EPS
Q2FY13 Q3FY13 Q4FY13 Q1FY14 Q2FY14

4,043
4,250
4,712
4,498
9%
5%
11%
-5%
4,559
1%
1,079
1,126
1,257
1,174
1,272
4%
4%
12%
-7%
8%
20.6
21.4
23.2
21.2
21.5
This page is intentionally left blank
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President
Mukesh Agarwal
CRISIL Research
+91 22 3342 3035
mukesh.agarwal@crisil.com
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Senior Director, Capital Markets
+91 22 4097 8052
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+91 22 3342 3137
prasad.koparkar@crisil.com
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Director, Customised Research
+91 22 3342 4091
binaifer.jehani@crisil.com
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+91 22 3342 3554
manoj.mohta@crisil.com
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+91 22 3342 3526
sudhir.nair@crisil.com
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Director, Equity Research
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mohit.modi@crisil.com
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Director, Funds & Fixed Income Research
+91 22 3342 8091
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Director, Industry Research
+91 22 3342 3567
ajay.dsouza@crisil.com
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+91 22 3342 3530
ajay.srinivasan@crisil.com
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Director, Capital Markets
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hani.jalan@crisil.com
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Director, Industry & Customised Research
+91 22 3342 8008
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CRISIL IERIndependentEquityResearch

Shriram City Union

Q2FY14 Results Update

Enhancing investment decisions

Explanation of CRISIL Fundamental and Valuation (CFV) matrix

Strong upside (>25% from CMP)

Upside (10-25% from CMP)

Align (+-10% from CMP)

Downside (negative 10-25% from CMP)

Strong downside (<-25% from CMP)

About CRISIL Limited

About CRISIL Research

Shriram City Union Finance Ltd

4/5 (Superior fundamentals)

3/5 (CMP is aligned)

Asset quality deteriorated marginally following a weak macro environment

Adjusted net profit

NM: Not meaningful; CMP: Current market price

Capital adequacy ratio (%)

Net NPA (%)

KEY STOCK STATISTICS

Total operating income

Non-gold disbursements muted q-o-q while gold loan disbursements revived

PERFORMANCE VIS--VIS MARKET

Client servicing desk

Source: Company, CRISIL Research estimates

For detailed initiating coverage report please visit: www.ier.co.in

Q2FY14 Results Summary (Standalone)

Net Interest Income

Non Interest Income

Total Operating Income

Other Operating Expenses

Pre- provision profit (PPP)

Provisions and write offs

No of equity shares (mn)

Source: Company, CRISIL Research

PAT increased 8% q-o-q and 18% y-o-y

Source: Company, CRISIL Research

y-o-y growth (RHS)

Source: Company, CRISIL Research

Total operating income

Total operating income up 1.4% q-o-q and 13% y-o-y

y-o-y growth (RHS)

Shriram City Union Finance Ltd

... largely due to 82.8% q-o-q increase in gold loan

Gold loan disbursements

q-o-q growth (RHS)

-2.3% 0.7% -3.7%

q-o-q growth (RHS)

Source: Company, CRISIL Research

Source: Company, CRISIL Research

AUM declined by 1.8% q-o-q

Small business loans a major contributor to AUM

Source: Company, CRISIL Research

Source: Company, CRISIL Research

Proportion of off-book to total AUM up 158 bps q-o-q

Spreads increased by 31 bps q-o-q

q-o-q growth (RHS)

Off book AUM

Source: Company, CRISIL Research

Source: Company, CRISIL Research

Cost to income ratio remains flat q-o-q

Gross NPAs rose by 17 bps sequentially