EPS raised by 3-6% and TP upped to Rs 1,055 from Rs 920 given the growth outlook
Analysis of recent industry data from MFIN shows that the recovery in asset quality/collections is an industry wide phenomenon, with NBFC-MFIs seeing improvement in 30-day PAR. BHAFIN still maintains industry-leading figures. On overall industry numbers, BHAFIN has gained 60 bp market share of MFI assets (to 9.1%) y-o-y — in a year that saw significant disruption from demonetisation. All the while, BHAFIN’s approach remains conservative with one of the smallest ticket sizes of disbursement (Rs 19k vs other NBFCs/SFBs at Rs 26k-29k).
As against other MFIs (i.e., non-banks), BHAFIN continues to enjoy best funding costs, employee productivity ratios and geographic reach. Importantly, it remains one of the best capitalised players. The strength of BHAFIN’s business model has played out through demonetisation, and we believe it is well positioned to return to strong growth rates in coming quarters. Our numbers improve on a better longer-term growth outlook, leading to 3-6% EPS increases and a new TP of Rs 1,055 (from Rs 920). Retain Outperform.
The self-help group system (NGO-led micro-lending in JLG model) has also grown all through demonetisation. We do not have data on delinquencies for SHGs — this has traditionally been a concern. BHAFIN’s reach at 324 districts across the country compares with