Result Update

Institutional Research
India I BFSI
11 August, 2023

Suryoday Small Finance Bank BUY

Price: Rs179
Strengthened Balance sheet + Profit momentum = BUY Target Price: Rs245
Forecast return: 37%
The 1QFY24 results analysis reveals a positive margin profile for the bank, marked by a
Market Data
strong increase in Yield on IEA to 15.6%. Resultantly, calculated NIMs expanded to an
Bloomberg: SURYODAY IN
attractive 9.8%, despite an uptick in CoF to 7.1%. Operational efficiency improved with a
52 week H/L: 192/83
lower CTI of 57.5%, while credit costs remained high at 3.7% of AAUM (notably due to one-
time provision for ARC). Gross advances grew 24.2% YoY, driven by housing and small Market cap: Rs19.0bn
business loans. Liability growth was robust at 42.3%, though CASA saw a decline. The bank's Shares Outstanding: 106.2mn
GNPA improved at 3% (10bps QoQ). The bank is adequately capitalized with a healthy CRAR Free float: 51.0%
of 32.7%. In recent times, the MFI sector has undergone a favorable re-evaluation, driven Avg. daily vol. 3mth: 11,64,025
by enhanced financial indicators and consistent asset quality performance. This positive Source: Bloomberg
trend is evident in Suryoday as well. These factors collectively justify a reconsideration of Changes in the report
the stock's current multiple. Consequently, we do an upward adjustment of the P/ABV Rating: BUY; Changed from ADD
multiple to 1.25x FY25E, (earlier multiple 1.0x). This new Target multiple still maintains a Target price: Rs245; Up by 32%
20% discount compared to the trading multiple of Ujjivan SFB and Utkarsh SFB. This FY24E Rs23.5: ; Up by 38%
adjustment accommodates the existing concern over Suryoday's weaker liability franchise. EPS:
FY25E Rs27.0 ; Up by 18%
We recommend a BUY rating and establish a revised TP of Rs245, (earlier TP Rs185). Source: Centrum Broking

Q1FY24 performance above our estimates Shareholding pattern

NII came in at Rs2.25bn (est. Rs2.18bn) led by a decent loan growth at 24.2% YoY to Rs63.7bn. Jun-23 Mar-23 Dec-22 Sep-22
Disbursals for the quarter grew at 17.5% to Rs11.9bn. Asset mix continues to remain in favour Promoter 23.3 23.3 23.3 28.0
of MFI lending (IF segment at 60% vs. 61% QoQ). Deposits also saw a healthy growth at 42% FIIs 1.7 1.2 2.6 3.9
YoY though CASA saw a decline from 17.1% to 14.9% sequentially. Other income was ahead DIIs 13.2 13.2 13.7 14.0
at Rs510mn (est. Rs306mn) led by PSLC income of Rs26cr. Opex was slightly higher at Public/other 61.8 62.3 60.4 54.1
Rs1.58bn (est. Rs1.45bn) led by higher staff cost and other opex. PPoP was above our Source: BSE
estimates at Rs1171mn (est. Rs1038mn). Provisions were higher at Rs537mn (est. Rs500mn).
Asset quality was maintained in seasonally weak quarter as GNPA and NNPA stood at 3.0% Centrum estimates vs Actual results
and 1.6% respectively as on 1QFY24 compared to 4QFY23 at 3.1% and 1.5%. YE Mar Centrum Actual Variance
(Rs mn) 1QFY24 1QFY24 (%)
Improvement in collection efficiency continues
NII 2,185 2,247 2.8%
Overall Collection efficiency (CE) further improved from ~97% in 1QFY23 to 100.4% in
PPOP 1,038 1,171 12.7%
1QFY24. Vikas loans performed well with CE of 99% (one EMI adjusted). Gross additions to
Provision 500 537 7.3%
GNPA stood at Rs48cr (3% of gross advances) vs. rollback recoveries of Rs18cr. Write off for
PAT 403 476 18.2%
the quarter has been around Rs31cr leading to flattish GNPA QoQ at Rs191cr (3% of gross
advances). GNPA adjusted for provision and ECLGS stands at Rs39cr (0.6% of advances).
Balance sheet further strengthened expect momentum on earnings
Suryoday balance sheet strengthening continues with higher incremental provisions on
Security receipts, Bank started to have CGMFU cover which will mitigate earnings cyclicality,
Recovery from ECLGS GNPA and Security receipts continue. With all this the net stressed book
is negligible. In this backdrop, P&L momentum to accelerate further as we move forward
and sectoral tailwinds might act as catalysts.
Valuation doesn’t factor in normalized profit going ahead; BUY with a revised TP of Rs245
The positive transformation in business volumes through the Vikas loan and the improved
portfolio quality with a growing share of secured assets have significantly strengthened the
bank's position. Furthermore, Suryoday's strategic steps, such as obtaining CGFMU cover to
mitigate earnings cyclicality, have demonstrated effective management initiatives. On FY25
ABV, we assign multiple/TP at 1.25x/Rs245. Risks: lower collection efficiency.

Financial and valuation summary

YE Mar (Rs mn) 1QFY24A 1QFY23A YoY (%) 4QFY23A QoQ (%) FY23A FY24E FY25E
NII 2,247 1,771 26.9 2,101 6.9 7,466 9,859 12,299
PPoP 1,171 794 47.5 1,017 15.1 3,375 4,703 5,507
Provisions 537 693 (22.6) 515 4.2 2,366 1,369 1,670
Net profit 476 77 516.6 389 22.4 777 2,495 2,871
Loan growth (%) 27.1 28.2 (3.8) 26.6 1.9 26.6 31.4 24.4
NIM (%) 9.8 9.6 2.6 9.5 2.9 9.2 10.4 10.7
Cost/income (%) 57.5 58.3 (1.2) 58.3 (1.4) 60.0 58.2 60.6
GNPA (%) 3.0 10.0 (70.1) 3.1 (4.2) 3.1 2.4 2.7
BFSI

RoA (%) 2.0 0.4 402.9 1.7 17.8 0.9 2.4 2.2 Shailesh Kanani
RoE (%) 12.1 2.0 500.4 10.1 20.1 5.0 14.5 14.4 Research Analyst, BFSI
+91-22 4215 9001
P/ABV (x) 0.0 0.0 0.0 0.0 0.0 1.3 1.1 0.9
[email protected]
Source: Company, Centrum Broking

Please see Disclaimer for analyst certifications and all other important disclosures.
Suryoday Small Finance Bank 11 August, 2023

Thesis Snapshot
Estimate revision Valuations
FY24E FY24E FY25E FY25E The positive transformation in business volumes through the Vikas loan and
YE Mar (Rs mn) % chg % chg
New Old New Old the improved portfolio quality with a growing share of secured assets have
NII 9,859 9,150 7.7 12,299 10,967 3.8 significantly strengthened the bank's position. Furthermore, Suryoday's
PPoP 4,703 3,734 26.0 5,507 5,038 15.2 strategic steps, such as obtaining CGFMU cover to mitigate earnings
PAT 2,495 1,806 38.2 2,871 2,601 18.7 cyclicality, have demonstrated effective management initiatives. On FY25
Loan growth (%) 31.4 31.4 - 24.4 24.5 - ABV, we assign multiple/TP at 1.25x/Rs245.
GNPA (%) 2.4 2.4 - 2.4 2.4 -
Source: Centrum Broking P/ABV mean and standard deviation
2.0
Suryoday SFB versus NIFTY Midcap 100 1.8
1.6
1m 6m 1 year 1.4
SURYODAY 6.3 67.5 96.1 1.2
1.0
NIFTY Midcap 100 4.8 22.5 24.3 0.8
Source: Bloomberg, NSE 0.6
0.4
0.2
0.0

Oct-21

Oct-22
Dec-21

Apr-22

Dec-22

Apr-23
Jun-22

Jun-23
Aug-21

Aug-22

Aug-23
Feb-22

Feb-23
P/ABV Mean
Mean + Std Dev Mean - Std Dev
Source: Bloomberg, Centrum Broking

Peer comparison
EPS (Rs) ABVPS (Rs) RoAA (%) RoAE (%)
Company
FY23A FY24E FY25E FY23A FY24E FY25E FY23A FY24E FY25E FY23A FY24E FY25E
AUBANK 21.4 26.0 33.8 159.7 183.9 215.7 1.8 1.7 1.8 15.9 14.7 16.4
EQSFB 5.2 7.3 10.0 43.6 49.2 57.3 1.9 2.0 2.2 12.2 14.7 17.5
UJJIVANS 5.6 5.7 6.6 21.5 26.1 31.3 3.9 3.0 2.8 31.4 23.8 22.5
Average 10.7 13.0 16.8 74.9 86.4 101.4 2.5 2.2 2.3 19.8 17.7 18.8
SURYODAY 7.3 23.5 27.0 140.5 168.5 196.2 0.9 2.4 2.2 5.0 14.5 14.4

Mcap CAGR (FY23-25E) % P/E (x) P/BV (x)

Company CMP (Rs) Rating TP (Rs)
(Rs mn) AUM NII Opex PPoP FY23A FY24E FY25E FY23A FY24E FY25E
AUBANK 702 Add 866 469,790 31.2 36.3 35.5 28.5 32.8 27.0 20.8 4.3 3.7 3.2
EQSFB 87 Buy 115 98,050 27.2 25.1 22.9 29.4 16.8 11.9 8.7 1.9 1.6 1.4
UJJIVANS 48 Buy 56 96,830 31.1 22.6 23.1 21.0 8.6 8.5 7.3 2.2 1.8 1.5
Average 29.8 28.0 27.2 26.3 19.4 15.8 12.3 2.8 2.4 2.0
SURYODAY 179 Buy 245 19,760 28.1 28.3 29.4 27.7 24.4 7.6 6.6 1.3 1.1 0.9

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Suryoday Small Finance Bank 11 August, 2023

Exhibit 1: Key Parameters

Key Parameters Reported Calculated
CoF calculated 4QFY23 1QFY24 QoQ change (bps) 4QFY23 1QFY24 QoQ change (bps)
AUBANK 6 6.6 40bps 6.3 7 70bps
EQSFB 6.6 6.9 30bps 7.2 7.5 30bps
Ujjivan 6.9 7.2 30bps 7.4 6.9 (50bps)
Suryoday 6.8 6.9 10bps 6.7 7.1 40bps
Utkarsh 7.4 7.6 20bps 7.8 8.3 50bps
Reported Calculated
NIMs calculated 4QFY23 1QFY24 QoQ change (bps) 4QFY23 1QFY24 QoQ change (bps)
AUBANK 6.1 5.7 (40bps) 6.6 6.2 (40bps)
EQSFB 9.1 8.8 (30bps) 9.3 9.3 -
Ujjivan 9.1 9.2 10bps 10.6 9.3 (130bps)
Suryoday 10.4 10.1 (30bps) 9.5 9.8 30bps
Utkarsh 9.4 9.2 (20bps) 9.4 9.6 20bps

Dep.
B/S CD Ratio Borr/Liab
Growth
AUBANK 92% 27% 10%
EQSFB 107% 36% 12%
Ujjivan 95% 45% 9%
Suryoday 111% 42% 31%
Utkarsh 103% 36% 14%
Source: Centrum Broking, Company Data

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Suryoday Small Finance Bank 11 August, 2023

PPT Snippets
Summary
 The 1QFY24 results analysis reveals a positive margin profile for the bank, marked by a
strong increase in Yield on IEA to 15.6%. Resultantly, NIMs expanded to an attractive
9.8%, despite an uptick in CoF to 7.1%.
 Operational efficiency improved with a lower CTI of 57.5%, while credit costs remained
high at 3.7% of AAUM (notably due to one-time provision for ARC).
 Gross advances grew 24.2% YoY, driven by housing and small business loans. Liability
growth was robust at 42.3%, though CASA saw a decline.
 The bank's GNPA improved at 3% (10bps QoQ). Vikas loans, the flagship product of the
bank, performed well with CE of 99% (one EMI adjusted). The bank is adequately
capitalized with a healthy CRAR of 32.7%.

Margin profile (Calculated) analysis

 Yield on IEA: Yields witnessed a healthy uptick (YoY/QoQ +44bps/+68bps) to 15.6%.
 Cost of Funds: Cost of funds also witnessed a jump of 47bps on QoQ basis to 7.1%.
 NIMs: In line with yields expansion NIMs also expanded (YoY/QoQ +25bps/+27bps) to
very attractive levels of 9.8%.
 CTI: On opex front too, bank has done well with CTI coming lower at 57.5%, showing an
improvement compared to the 1QFY23/4QFY23 by 72/79bps, respectively. *Moreover,
opex for the quarter also includes CGMFU cost for the first time to the tune of Rs10cr.*
 Credit cost: Despite credit cost for the quarter includes one-time ARC provision of
Rs41cr (76% of total provision for the quarter) it remained flattish YoY at 3.7%
indicating asset quality improvement in seasonally weak quarter.

Asset profile
 Gross advances grew by 24.2% YoY to Rs63bn primarily led by HL (+43%/+25%
YoY/QoQ) and SBL segment (+82%/+16% YoY/QoQ).
 Disbursements for the quarter grew at 17.5% to Rs11.9bn. Asset mix continues to
remain in favour of unsecured lending (60:40 vs. 61:39 QoQ). Overall CE improved to
100.4% (vs. 97% QoQ).

Liability profile
 Deposits witnessed a robust growth of 42.3% with improvement in retail deposit mix
(75.7% vs. 73.1% QoQ). However, CASA continued to witness its declining trend, in line
with peers, to 14.9% (-220bps QoQ). Bank is adequately capitalized with healthy CRAR
of 32.7%, well above statutory requirement.
 Branch network saw a YoY addition of 45branches to the total of 609 branches.

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Suryoday Small Finance Bank 11 August, 2023

Concall Highlights
Business Performance
 Opening remarks: India economy continues to witness robust macro-economic factors.
In line with this Banking industry is placed to do well with strong credit growth.
Suryoday is continuing its steady and sequential improving performance on QoQ basis.
Customer base of the bank stands at 24.3Lakh (+21% YoY). Vikas loan stands at
Rs1282cr which is majorly covered under CGMFU with current customer base of 2.1L;
17.5% YoY jump. Going ahead the target for Vikas loan is to reach Rs2000cr by FY24
end. Borrowings are majorly from refinancing institutions which are long term and non-
callable in nature. FY24 guidance – gross advances growth +30%; deposits +35%; RoA
– 2.25%, ROE >15%; GNPA <2%, NNPA <0.5%.
 Product mix led to yield expansion for the quarter anf going ahead management is
contemplating an increase in lending rate between 25-50bps for its unsecured
portfolio.
 Branch expansion expected for FY24 is 150-160 and year end CASA target is ~21%.
 Going forward, CTI is expected to be ~55% on the back of operating leverage and
increase in core income. Moreover, FY25 – CTI would continue to be range bound as
the bank have invested heavily in FY23.
 CoF is expected to peak in Q2; +25-30bps increase expected in next quarter.
 PSLC income led to jump in other income for the quarter by ~Rs26cr (Rs1200cr
certificates sold at 2% however right now prices have come down ~0.1%). Going
forward the income visibility form this source is minimal and management doesn’t
expect much for remaining part of FY24.
 RoA guidance has been increased from 2% to 2.25% for FY24 with exit RoA ~3% for the
year.
 Collection team is in house except for hard bucket collections where it is outsourced.
Sourcing of business in case of RA assets is from both own sources and DSAs.
 CGFMU expense is ~1% of total insured amount. In Q1FY24, bank has expended Rs10cr
as it plans to insure Rs4000cr of book by year end.
 Collections have seen improvement in JLG segment and other operating parameters
have reached pre-covid levels.
 Credit cost for FY24 – 1-1.5% credit cost.
 ECLGS recovery is ~Rs2.5cr per month and it is expected to pick up from 3QFY24.
 Incremental build up in GNPA is not expected much.
 Micro HL current rate of disbursements stands at Rs12 to 15cr per month.

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Suryoday Small Finance Bank 11 August, 2023

Exhibit 2: Gross Advances trend Exhibit 3: Disbursement trend

Gross Advances (Rs mn) Disbursement (Rs mn)
70000 20000

60000
15000
50000
40000
Q4FY23, Q1FY24, 10000 Q4FY23,
30000 Q1FY23, Q2FY23, Q3FY23, 63,720
61,150 Q3FY23, 16,880
51,322 53,784 54,082 Q2FY23, Q1FY24,
20000 Q1FY23, 12,651
5000 11,182 11,900
10,122
10000
0 0
Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24

Source: Centrum Broking, Company Data Source: Centrum Broking, Company Data

Exhibit 4: Growing customers base

Customer Base (Lakh)

Q1FY24 Q1FY24, 24.3

Q4FY23 Q4FY23, 23.1

Q3FY23 Q3FY23, 21.9

Q2FY23 Q2FY23, 20.9

Q1FY23 Q1FY23, 20.1

0 5 10 15 20 25 30

Source: Centrum Broking, Company Data

Exhibit 5: Portfolio Mix – Product Wise Exhibit 6: Regional Portfolio Mix (Overall)

Source: Centrum Broking, Company Data Source: Centrum Broking, Company Data

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Suryoday Small Finance Bank 11 August, 2023

Asset Quality
 Gross additions to GNPA stood at Rs48cr (3% of gross advances) vs. rollback recoveries
of Rs18cr. Write off for the quarter has been around Rs31cr leading to flattish GNPA
QoQ at Rs191cr (3% of gross advances). GNPA adjusted for provision and ECLGS stands
at Rs39cr (0.6% of gross advances).
 SRs issued by ARC is required to be valued every 6 months – current value Rs76cr with
banks share of Rs65cr. Rating assigned to the ARC pool and consequently SR’s is ‘INR
RR2’ (75 – 100% recovery). One-time ARC related provision of Rs41cr was done during
the quarter. Bank expects the same to be reversed in the forthcoming quarters & to be
used as floating provision.
 Vikas loan continues to exhibit superlative performance with CE of 99% (one EMI
adjusted).
 CE stood at 95% (one EMI adjusted) and overall CE at 100%. There has been slight
increase (+60bps QoQ) in PAR 30+ for IF segment which can be attributed to seasonal
factors.

Exhibit 7: GNPA
Particulars Amt (RsMn)
GNPA 1,910
ECLGS(excluding till Jun-23 Rs8.8cr) 620
GNPA excluding ECLGS 1,290
Provision 900
Balance GNPA 390
Source: Centrum Broking, Company Data

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Suryoday Small Finance Bank 11 August, 2023

Exhibit 8: Quarterly Financials

Rs mn) Q1FY22 Q2FY22 Q3FY22 Q4FY22 Q1FY23 Q2FY23 Q3FY23 Q4FY23 Q1FY24
Income statement
Interest earned 2,157 2,345 2,550 2,366 2,814 2,810 2,918 3,294 3,581
Interest expended 922 873 877 902 1,044 1,051 1,083 1,193 1,334
Net Interest Income 1,234 1,472 1,673 1,464 1,771 1,759 1,835 2,101 2,247
Other income 228 334 182 200 132 247 257 340 510
Total Income 1,463 1,806 1,854 1,664 1,902 2,006 2,091 2,441 2,757
Operating Expenses 924 979 1,050 1,180 1,108 1,075 1,243 1,424 1,587
Employees 518 547 553 664 532 516 644 731 752
Others 406 432 497 516 576 559 814 693 835
Operating profit 539 827 805 484 794 931 848 1,017 1,171
Provisions 1,108 973 726 1,121 693 761 612 515 537
Profit before tax -569 -145 79 -637 101 170 236 502 634
Taxes -91 -126 32 -155 24 40 55 113 158
Net Profit -478 -19 47 -482 77 130 181 389 476
Balance sheet
Shareholders Funds 15,505 15,489 15,535 15,051 15,139 15,274 15,448 15,847 16,330
Borrowings 16,682 17,065 23,222 25,513 26,830 23,500 23,615 27,654 25,485
Deposits 33,170 31,290 31,696 38,498 40,201 42,070 46,969 51,667 57,216
Other liabilities 2,175 2,646 2,511 2,739 3,128 3,005 2,971 3,444 3,047
Total liabilities 67,532 66,490 72,964 81,801 85,298 83,849 89,003 98,612 1,02,078
Cash & bank 8,130 3,261 3,279 9,777 4,420 4,402 6,665 8,331 8,480
Advances 37,930 42,035 46,201 47,509 48,625 50,902 53,269 60,151 61,182
Investments 18,830 18,383 15,114 20,577 27,998 24,244 24,720 25,702 27,216
Fixed assets 420 414 531 1,152 1,502 1,576 1,723 1,645 1,581
Other assets 2,230 2,398 2,353 2,787 2,753 2,725 2,627 2,784 2,989
Total assets 67,540 66,491 67,478 81,802 85,298 83,849 89,003 98,612 1,02,078
Balance sheet (%)
Loan growth 9% 19% 29% 28% 37% 27% 11% 21% 24%
Deposit growth 16% 0% -5% 18% 21% 34% 48% 34% 42%
Loans / Deposits 113% 135% 154% 132% 128% 128% 115% 118% 111%
Investment / Deposits 57% 59% 48% 53% 70% 58% 53% 50% 48%
Capital Adequacy
Tier-1 47.6 41.8 37.8 34.4 33.5 33.1 33.5 30.8 30.2
Tier-2 4.5 4.1 3.6 3.4 2.9 2.8 2.9 2.9 2.5
CRAR 52.10% 45.86% 41.44% 37.86% 36.37% 35.88% 36.35% 33.72% 32.65%
Profitability (%)
Yield on assets 13.7% 15.3% 15.9% 13.0% 15.2% 15.4% 15.3% 15.0% 15.6%
Cost of funds 7.7% 7.4% 6.8% 6.4% 7.1% 7.4% 6.9% 6.7% 7.1%
NIM 7.9% 9.6% 10.4% 8.1% 9.6% 9.6% 9.6% 9.5% 9.8%
Other income / Assets 0.3% 0.5% 0.3% 0.3% 0.2% 0.3% 0.3% 0.4% 0.5%
Cost / Income 63.1% 54.2% 56.6% 70.9% 58.3% 53.6% 59.5% 58.3% 57.5%
Employees 35% 30% 30% 40% 28% 26% 31% 30% 27%
Others 28% 24% 27% 31% 25% 22% 34% 28% 30%
Cost / Assets 1.4% 1.5% 1.6% 1.6% 1.3% 1.3% 1.4% 1.5% 1.6%
RoA -2.8% -0.1% 0.3% -2.6% 0.4% 0.7% 0.9% 1.7% 2.0%
RoE -12.3% -0.5% 1.2% -12.4% 2.0% 3.4% 4.7% 10.1% 12.1%
Asset quality (%)
GNPA 10.2% 10.8% 10.5% 11.8% 10.0% 9.9% 4.2% 3.13% 3.00%
NNPA 4.7% 4.7% 5.8% 5.9% 5.0% 4.7% 2.8% 1.54% 1.63%
PCR 55.5% 58.8% 47.8% 52.5% 52.7% 54.5% 36.2% 51.5% 46.6%
Credit Cost 12.3% 10.0% 6.7% 9.9% 6.2% 6.3% 4.8% 3.7% 3.7%
Source: Company, Centrum Broking

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Suryoday Small Finance Bank 11 August, 2023

Exhibit 9: ROAE Tree

Particulars FY20 FY21 FY22 FY23 FY24E FY25E
Total Assets 53,645 67,120 81,802 98,612 1,13,718 1,42,495
Average total assets 53,645 60,383 74,461 90,207 1,06,165 1,28,107
Equity 10,662 15,969 15,051 15,847 18,538 21,409
Average Equity 10,662 13,316 15,510 15,449 17,192 19,973
Interest Income on term loans/ Average total assets 13.1% 11.0% 11.0% 11.4% 13.1% 13.2%
Income on investments/money with RBI/other banks /
1.2% 1.8% 1.7% 1.8% 1.9% 1.9%
Average total assets
Non-Interest Income/ Average total assets 0.0% 1.3% 1.3% 1.1% 1.3% 1.3%
Total Income/ Average total assets 14.3% 14.1% 13.9% 14.2% 16.3% 16.5%
Interest on Deposits, borrowings and debt securities /
5.1% 6.1% 4.8% 4.8% 5.7% 5.6%
Average total assets
Net Interest Income / Average total assets 9.1% 6.8% 7.8% 8.3% 9.3% 9.6%
Net Total Income/ Average total assets 9.1% 8.1% 9.1% 9.4% 10.6% 10.9%
Operating Expenses / Average total assets 5.1% 5.4% 5.5% 5.6% 6.2% 6.6%
PPOP/Average total assets 4.1% 2.6% 3.6% 3.7% 4.4% 4.3%
Provision Cost / Average total assets 3.6% 2.4% 4.8% 2.6% 1.3% 1.3%
Profit before tax / Average total assets 0.4% 0.2% -1.3% 1.1% 3.1% 3.0%
Tax expense/ Average total assets 0.0% 0.0% 0.0% 0.3% 0.8% 0.8%
One-time tax adjustment/Average Total Assets 0 0 0 0 0 0
RoAA 0.4% 0.2% -1.3% 0.9% 2.4% 2.2%
Leverage (Average total assets/average Equity or average
5.0 4.5 4.8 5.8 6.2 6.4
Net-worth)
RoAE 2.2% 0.9% -6.0% 5.0% 14.5% 14.4%
Source: Company, Centrum Broking

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Suryoday Small Finance Bank 11 August, 2023

P&L Balance sheet

YE Mar (Rs mn) FY21A FY22A FY23A FY24E FY25E YE Mar (Rs mn) FY21A FY22A FY23A FY24E FY25E
Interest earned 7,761 9,418 11,837 15,925 19,418 Share capital 1,061 1,062 1,062 1,062 1,062
Interest expended 3,657 3,574 4,371 6,066 7,119 Reserves & surplus 14,908 13,990 14,786 17,476 20,347
Net Interest Income 4,105 5,845 7,466 9,859 12,299 Deposits 32,557 38,498 51,667 68,706 93,596
Other income 764 936 974 1,392 1,689 Borrowings 16,666 25,513 27,654 21,662 21,008
Total Income 4,869 6,780 8,440 11,250 13,987 Other Liabilities 1,928 2,739 3,444 4,812 6,482
Operating Expenses 3,286 4,131 5,065 6,547 8,481 Total liabilities 67,120 81,802 98,612 1,13,718 1,42,495
Employees 1,858 2,282 2,424 3,134 4,157 Cash balances with RBI 1,028 1,595 7,842 4,592 6,212
Others 1,428 1,849 2,642 3,413 4,324 Balances with banks 4,938 8,182 489 538 591
PPoP 1,583 2,649 3,375 4,703 5,507 Investments 18,737 20,577 25,702 23,054 29,347
Provisions 1,464 3,579 2,366 1,369 1,670 Advances 39,828 47,509 60,151 79,012 98,276
Profit before tax 119 (930) 1,009 3,335 3,837 Fixed Assets 432 1,152 1,645 1,974 2,369
Taxes 0 0 232 839 966 Other Assets 2,157 2,787 2,784 4,549 5,700
Net Profit 119 (930) 777 2,495 2,871 Total assets 67,120 81,802 98,612 1,13,718 1,42,495

Ratios Ratios
YE Mar FY21A FY22A FY23A FY24E FY25E YE Mar (Rs mn) FY21A FY22A FY23A FY24E FY25E
Growth (%) Balance Sheet (%)
Loans 12.8 19.3 26.6 31.4 24.4 Loans / Deposits 122.3 123.4 116.4 115.0 105.0
Deposits 14.3 18.2 34.2 33.0 36.2 Investments / Deposits 57.6 53.4 49.7 33.6 31.4
RWA growth 0.0 29.3 27.0 22.0 23.0 CASA 15.4 18.8 17.1 20.4 20.2
NII (16.3) 42.4 27.7 32.1 24.8 Assets/equity (x) 4.2 5.4 6.2 6.1 6.7
Other income 0.0 22.5 4.1 42.8 21.4 RWA / Total assets 50.4 53.4 56.3 59.5 58.4
Opex 20.8 25.7 22.6 29.2 29.5 Capital ratios (%)
PPoP (27.5) 67.4 27.4 39.4 17.1 Tier-1 46.7 34.1 28.2 27.1 25.5
Provisions (24.9) 144.5 (33.9) (42.1) 22.0 Tier-2 4.1 2.3 1.9 1.6 1.3
Net profit (49.5) nm nm 221.1 15.1 CRAR 50.9 36.3 30.1 28.7 26.8
Profitability (%) Asset quality ratios (%)
Yield on assets 18.1 19.8 20.4 21.8 21.1 GNPA (Rs mn) 3,937 5,974 1,913 1,912 2,690
Cost of funds 8.0 7.0 6.1 7.1 6.9 NNPA (Rs mn) 1,881 2,834 929 654 581
NIM 7.2 8.4 9.2 10.4 10.7 GNPA 9.4 11.8 3.1 2.4 2.7
Other income / Total inc. 15.7 13.8 11.5 12.4 12.1 NNPA 4.7 5.9 1.5 0.8 0.6
Other inc. / avg assets 1.3 1.3 1.1 1.3 1.3 PCR 52.2 52.6 51.5 65.8 78.4
Cost/Income 67.5 60.9 60.0 58.2 60.6 Slippage 9.5 10.6 8.3 1.9 1.8
Employee 38.2 33.7 28.7 27.9 29.7 NNPA / Equity 11.8 18.8 5.9 3.5 2.7
Other 29.3 27.3 31.3 30.3 30.9 Per share
Opex/ Avg assets 5.4 5.5 5.6 6.2 6.6 EPS 1.1 (8.8) 7.3 23.5 27.0
Provisioning cost 3.9 8.2 4.4 2.0 1.9 DPS 0.2 0.0 0.0 0.0 0.0
Tax rate 0.0 0.0 23.0 25.2 25.2 BVPS 150.5 141.8 149.3 174.6 201.7
RoE 0.9 (6.0) 5.0 14.5 14.4 ABVPS 132.7 115.1 140.5 168.5 196.2
RoA 0.2 (1.2) 0.9 2.4 2.2 Valuation (x)
RoRWA 0.7 (2.4) 1.6 4.1 3.8 P/E 160.2 nm 24.4 7.6 6.6
Du-pont (%) P/BV 1.2 1.3 1.2 1.0 0.9
Interest income 12.8 12.6 13.1 15.0 15.2 P/ABV 1.3 1.6 1.3 1.1 0.9
Interest expenses 6.1 4.8 4.8 5.7 5.6 Source: Company, Centrum Broking
NII 6.8 7.8 8.3 9.3 9.6
Other income 1.3 1.3 1.1 1.3 1.3
Total income 8.1 9.1 9.4 10.6 10.9
Operating expenses 5.4 5.5 5.6 6.2 6.6
Employee 3.1 3.1 2.7 3.0 3.2
Other 2.4 2.5 2.9 3.2 3.4
PPOP 2.6 3.6 3.7 4.4 4.3
Provisions 2.4 4.8 2.6 1.3 1.3
PBT 0.2 (1.3) 1.1 3.1 3.0
Tax 0.0 0.0 0.3 0.8 0.8
RoA 0.2 (1.2) 0.9 2.4 2.2
Source: Company, Centrum Broking

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Suryoday Small Finance Bank 11 August, 2023

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Centrum Institutional Research 11

Suryoday Small Finance Bank 11 August, 2023

The opinions and projections expressed herein are entirely those of the author and are given as part of the normal research activity of Centrum Broking and
are given as of this date and are subject to change without notice. Any opinion estimate or projection herein constitutes a view as of the date of this report
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Ratings definitions
Our ratings denote the following 12-month forecast returns:
Buy – The stock is expected to return above 15%.
Add – The stock is expected to return 5-15%.
Reduce – The stock is expected to deliver -5-+5% returns.
Sell – The stock is expected to deliver <-5% returns.
Suryoday Small Finance Bank
400

300

200

100

0
Aug-21 Dec-21 Apr-22 Aug-22 Dec-22 Apr-23 Aug-23
Suryoday Small Finance Bank Ltd

Source: Bloomberg

Centrum Institutional Research 12

Suryoday Small Finance Bank 11 August, 2023

Disclosure of Interest Statement

1 Business activities of Centrum Broking Centrum Broking Limited (hereinafter referred to as “CBL”) is a registered member of NSE (Cash, F&O and Currency Derivatives
Limited (CBL) Segments), MCX-SX (Currency Derivatives Segment) and BSE (Cash segment), Depository Participant of CDSL and a SEBI registered
Portfolio Manager.
2 Details of Disciplinary History of CBL CBL has not been debarred/ suspended by SEBI or any other regulatory authority from accessing /dealing in securities market.

3 Registration status of CBL: CBL is registered with SEBI as a Research Analyst (SEBI Registration No. INH000001469)
Suryoday Small Finance
Bank
4 Whether Research analyst’s or relatives’ have any financial interest in the subject company and nature of such financial interest No

5 Whether Research analyst or relatives have actual / beneficial ownership of 1% or more in securities of the subject company at the end of the month
No
immediately preceding the date of publication of the document.
6 Whether the research analyst or his relatives has any other material conflict of interest No

7 Whether research analyst has received any compensation from the subject company in the past 12 months and nature of products / services for which
No
such compensation is received
8 Whether the Research Analyst has received any compensation or any other benefits from the subject company or third party in connection with the
No
research report
9 Whether Research Analysts has served as an officer, director or employee of the subject company No

10 Whether the Research Analyst has been engaged in market making activity of the subject company. No

11 Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past twelve months; No

Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company
12 No
in the past twelve months;
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage
13 No
services from the subject company in the past twelve months;

Member (NSE and BSE). Member MSEI (Inactive)

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SEBI REGN NO.: INP000004383

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Centrum Institutional Research 13