Edelweiss Financial - Company Update - ICICI Securities

Edelweiss Financials reported a weak set of Q1FY21 numbers wherein the company reported a consolidated loss of Rs. 264 crore mainly due to impairment of Rs. 145 crore and muted performance in credit and insurance business. In credit business, the wholesale lending book de-grew 18% QoQ to Rs. 10953 crore. Advances de-growth led to dip in net revenue by 92% QoQ to Rs. 95 crore. Muted topline and higher provisions led to a loss worth Rs. 156 crore. In retail credit (~55% of overall loan book), EHFL growth was stable with loan book at Rs. 4490 crore, up 3.8% QoQ. ERFL loan growth came at Rs. 1312 crore, down 5% QoQ.

Valuation & Outlook

Adequate capital adequacy and retail moratorium at 25% provide cushion to credit portfolio. Stake sale of wealth, capital markets, alternate assets have unlocked value and provided capital. This will also help in debt repayment and infusion in insurance subsidiaries. As a holding company structure is gradually changing with each stake sale, we expect earnings to remain volatile on consolidated basis in near future. Existing shareholders will receive shares of step-down companies under the current rejig of stakes but we believe this may take two to three years. We maintain HOLD rating with a target price of Rs. 77.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_EdelweissFin_CoUpdate_Sep20.pdf

Shares of Edelweiss Financial Services Ltd. was last trading in BSE at Rs.78.85 as compared to the previous close of Rs. 80. The total number of shares traded during the day was 96653 in over 934 trades.

The stock hit an intraday high of Rs. 80.5 and intraday low of 77.5. The net turnover during the day was Rs. 7634962.

Source : Equity Bulls

Keywords