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Shriram City Union Finance Ltd - Q1 FY22 Call Highlights (Not Rated) - YES Securities

Posted On: 2021-08-02 16:14:02 (Time Zone: UTC)

Collection, Stage Movement, Restructuring & Credit Cost

- Collection Efficiency at 99% in April, 86% in May and 93% in June

- Restructuring 2.0 only at Rs0.4bn (<15bps of AUM) - Q2 FY22 could see some increase of Rs0.6-0.7bn (20bps of AUM)

- ECLGS disbursements was also low at
- Overall Stage-2 assets increased from 8% to 11.7% on qoq basis

- Rs2.26bn of write-off in Q1 FY22 v/s 2.25bn in Q1 FY21

- Adequate cushion against future business disruptions with Covid provisioning buffer of Rs7bn (25% of AUM)

- Management confident of pulling back the asset quality from Q2 onwards - consequently credit cost could see some release

Disbursements & AUM Growth

- Disbursements at Rs17.25bn in April,
- Business momentum will further improve in Q2 FY22

- Repeat customers in SME comprise 50-60% of disbursements - 20% of TW disbursements are typically to repeat customers

- Resilient asset quality in 2w segment (<100 bps qoq increase in Stage-3) - 80-85% of portfolio is Hero and Honda vehicles and Bajaj is <10% - about 30% of portfolio is scooters - Stage-2 has increased qoq by 3-4%

Funding, NIM & Opex

- NIM was impacted by negative carry of excess liquidity (Rs44.4bn - 18% of borrowings) - otherwise would have been higher due to material decline in funding cost

- Fresh borrowings of ~Rs35bn in Q1 FY22 with elongation of tenor

- Sustained strong growth (up 37% yoy) in Retail deposit franchise - stands at 22% of borrowings - good traction from digital marketing

Shriram Housing

- Home Loan profile (62% of AUM) - 80% SE and 20% Salaried - 80% customers have CIBIL of 700+ and only 7-8% are NTC - ATS is Rs1.5mn - Portfolio LTV at 55-60% at the time of origination

- Restructuring at 3% of AUM including 1% for the current bucket (good customers) - Most restructured customers have paid EMIs in June

- Stage-2 at 4.4% v/s 3.2% as of March - Stage-3 at 1.9% v/s 2.3% as of March

- New book (portfolio of last three years) which is 75% of AUM has significantly lower Stage-3

- Collection Efficiency has been improving and Bounce Rate has been declining

- Will be leveraging existing SCUF branches for growth particularly in AP and TL regions

- SCUF infused Rs2bn in the housing subsidiary during Q1 FY22 and increased stake to 81% - plans to infuse another Rs3bn before end of FY22

Shares of Shriram-City Union Finance Ltd. was last trading in BSE at Rs. 1825.7 as compared to the previous close of Rs. 1855.7. The total number of shares traded during the day was 1710 in over 731 trades.

The stock hit an intraday high of Rs. 1899 and intraday low of 1808.25. The net turnover during the day was Rs. 3197051.

Source: Equity Bulls

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