Reviews
In this edition, we have reviewed Aditya Birla Capital and Bandhan Bank. We suggest our reader-investors to HOLD in Aditya Birla Capital and Bandhan Bank.
We had previously recommended Aditya Birla Capital in Volume 34, Issue No. 13, dated May 27 – June 10, 2019 under the ‘Low Price Scrip’ segment. The stock was then trading at Rs 95.15 and was recommended based on the company’s strong valuations and growth prospects.
Aditya Birla Capital Limited is an investment company which through its subsidiaries provides financing, investment, protection and advisory services to its customers and clients including lending, financing and wealth management solutions, customised solutions in areas of personal and business loans, corporate finance, mortgages, capital market-based lending, housing finance solutions, etc. On the consolidated financial front, the company gained net interest income of Rs 1,775.64 crore for Q3FY20, up by 4.67 per cent from Rs 1,696.28 crore in Q3FY19. The total income for Q3FY20 is calculated to be Rs 4,329.05 crore for Q3FY20, thus clocking a growth of 14.48 per cent YoY. The PBT was Rs 342.18 crore in Q3FY20, depicting a fall of 3.57 per cent from Q3FY19 when it was reported at Rs 354.87 crore. The net profit rose by 15.69 per cent from Rs 208.36 crore in Q3FY19 to Rs 241.06 crore in Q3FY20.
On the annual front, the company gained net interest income of Rs 6,418.88 crore for FY19, up by 31.11 per cent from Rs 4,895.70 crore in FY18. The total income for FY19 is calculated to be Rs 15,171.97 crore, thus clocking a growth of 31.61 per cent YoY. The PBT was Rs 1,380.65 crore in FY19, depicting a rise of 30 per cent from FY18 when it was reported at Rs 1,095.84 crore. The net profit rose by 17.05 per cent from Rs 693.08 crore in FY18 to Rs 811.30 crore in FY19. Owing to the company’s profitable growth aided by robust asset mix, we recommend our investor-readers to HOLD.
We had previously recommended Bandhan Bank in Volume 34, Issue 2, dated December 24, 2018 to January 6, 2019 under the ‘Choice Scrip’ section. The stock was then trading at Rs 556 and was recommended based on the company’s strong balance-sheet and increasing market share. Bandhan Bank Limited is a commercial bank offering products and services designed for micro banking and general banking Its asset products consist of retail loans including a substantial portfolio of micro loans, as well as micro, small and medium enterprise (SME) loans and small enterprise loans. Its liability products consist of savings accounts, current accounts and a variety of fixed deposit accounts.
On a consolidated quarterly front, the company reported net interest income of Rs 1,680 crore in Q4FY20, growing by 33.57 per cent from Rs 1,258 crore in Q4FY19. The GNPA ratio improved by 56 bps in Q4FY20 to 1.48 per cent from 2.04 per cent in Q4FY19.The company reported net profit of Rs 517 crore in Q4FY20, down by 20.58 per cent from Rs 651 crore in Q4FY19.
On the annual front, the net interest income was reported at Rs 6,324 crore in FY20 from Rs 4,495 crore in FY19, growing by 40.69 per cent. The capital adequacy ratio was 27.43 per cent in FY20 and 29.20 per cent in FY19. The company reported net profit of Rs 3,024 crore in FY20, up by 54.96 per cent from Rs 1,952 crore in FY19. According to the management, 78 per cent of the company’s portfolio remains in the green zone while only around 6 per cent is in the red zone and thus quicker normalcy is expected in operations. The relief package provided by the government should aid bankers to contain NPAs going forward as well. We thus recommend HOLD.
(Closing price as of June 03, 2020)|