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Centrum Broking
Satin
Creditcare (Buy)
CMP: ₹362.05
Target: ₹590
Satin Creditcare Network is a non-deposit accepting micro finance non-banking financial company, which is engaged in micro-finance activities. The company operates through finance segment.
We retain ‘buy’ on Satin Creditcare Network with TP unchanged a ₹590. First quarter results of 2019 were strong on the operational front. The quarter saw Satin gain traction on several counts — rating upgrade, contribution from non-MFI portfolio, further reduction in PAR portfolio and strong capital position.
Assets under management grew 43.2 per cent y-o-y and we expect the acceleration therein to continue. Focus shifts from asset quality to growth. We see RoEs inch towards 13-14 per cent by end-FY20E. Valuations at 1.4x FY20E remain attractive.. We continue to prefer Satin Creditcare in the micro-lending space.
Key risks: Lower-than-expected growth; elevated NPA’s and thus the provisioning thereon.
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