Equity Analysis /

TCS Group: TCS (O/W): Selective approach shields against consumer credit overheating

    Evgeniy Kipnis
    Evgeniy Kipnis

    Senior Banking/Consumer Analyst

    26 September 2019
    Published by
    Despite concerns related to consumer lending overheating, we believe Tinkoff can grow its credit book in a “cherry-picking” manner. At the same time, the recent SPO cushions regulatory pressure on capital. We see home equity loans as an essential source of upside, potentially boosting Tinkoff’s credit book by 65-95% medium term. Overhang risk is off the table at least until YE19, while the stock could qualify for MSCI inclusion (subject to getting a Russian listing). We continue to see Tinkoff as an attractive long-term story, given the abovementioned catalysts, coupled with undemanding valuations. Our 12M forward TP is up 5% to $24.6/GDR, implying 39% upside potential and an O/W rating. Current levels appear to provide an attractive entry point, as the stock trades below its recent SPO price.