Top Stock Picks For 2017 By Nirmal Bang
|Top Stock Picks For 2017 By Nirmal Bang|
|Date of report:||December 31, 2017|
|Type of Report:||Model Portfolio|
|Full Report:||Click here to download the file in pdf format|
Entering the growth phase
– FY16 marked an end to the company’s three-year long consolidation phase.
Key factors in the growth of gold loans were stable gold prices, steady LTV regime, a level-playing field, weak players shifting out and de-focus by banks.
– Demonetisation Impact
– Collections as well as disbursement are impacted on account of shortage of availability of new currency. Collections were 70% of normal in November.
Situation is expected to normalise within next couple of months.
– De-risking gold loan portfolio from volatility in gold prices
– Diversification into non-gold products
– It has embarked on a strategy of diversifying into microfinance, home loan, CV financing and LAP. Non-gold portfolio forms 12% of AUM in FY16 against 4% in FY15.
– Robust asset quality
– Despite moving to 90-day recognition for NPAs (a year ahead of regulatory requirement) GNPAs eased significantly backed by its strategy of de-risking gold loans. Also, the company has provided 40bps for standard assets (a year ahead of regulatory requirement).
– Return ratios to strengthen further
– With likely strong growth in AUM, stable margins, contained credit costs and operating as well as financial leverage to kick in, we expect RoA/RoE to improve further by 90bps/840bps to strong levels of 3.8%/21.6%, respectively in FY19E.