Shriram City Union Finance - Not Rated - YES Securities

- Collection Efficiency reaching pre-Covid level - improved from 80% in July to 82% in August to 95% in September/October - it was 93% in SME (pre-covid at 95%) and 2w segments in September

- Do not envisage material restructuring - up to 1% of customer base and about 150-250cr in terms of portfolio - mainly to businesses like stand-alone hospitals, schools, small residential hotels, small manufacturing units and few small builders

- Number of customers taking full moratorium were ~182000 (~1.5% of AUM) - of this, 122000 paid in Sept - and of the remaining 58000, many has paid in October

- Stage-2 assets at 4-5% as of Sept 30

- Credit Cost to stabilize around 2.8-3% in coming quarters - based on current collection efficiency, incremental additional prov. may not be required and forward flow in collection buckets may not be much - thus Stage-3 would remain at similar levels going ahead

- Expect overall disbursements momentum to continue - AUM growth to return with cautious lending resumption of SME loans

- SME disbursement in Oct at 250cr v/s 350cr in Q2 - not disbursed much under ECLGS

- AUM growth in FY21 to be 0-3% - H2 growth to neutralize the portfolio decline of H1

- Funded >1 lac new 2-wheelers in Navratri-Dusshera - expect Diwali to be equally strong

- Pre-owned 2w disbursement at 200cr in Q2 - 60-70% of customers are self-employed - ATS is 30-40K - funding up to 3-year old 2w - working through used 2w dealers

- Introduced gold loans in non-South geographies (opened 20 branches in North) - majority gold loan was being distributed in South and Maharashtra

- Gold loan tenor at 150-180 days - portfolio LTV 60% on current price - incremental LTV avg. 70%

- 3147cr fresh funding raised in Q2 - bank funding mainstay - retail FDs increased to 22% of borrowings (2 lac+ depositors) - 2619cr unencumbered liquidity buffer + 700cr SLR investment

- Confident about raising similar quantum of funding in Q3 also - incremental CoB is around 9%

- Seeing good demand for securitization for 2w loans and have a sanction for SME loans - the market is improving

- Some of the cost reduction is permanent - cost/income ratio will not revert to pre-Covid level

- No requirement to add new branches in next 2 quarters - could add 500-600 people after having reduced it by 2000 in recent period

Shares of SHRIRAM CITY UNION FINANCE LTD. was last trading in BSE at Rs.856.25 as compared to the previous close of Rs. 821.9. The total number of shares traded during the day was 1569 in over 430 trades.

The stock hit an intraday high of Rs. 873.55 and intraday low of 839.1. The net turnover during the day was Rs. 1335325.

Source : Equity Bulls

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