BFSI Q4 Results Preview - Deja Vu Of 9M FY24 Performance: Axis Securities

Axis Securities Report

Banks – NIMs to Compress; Earnings Momentum to Decelerate!

Banks are likely to witness yet another strong quarter in terms of asset quality; however, we remain vigilant of any pockets of stress in the unsecured portfolios. Slippages should remain under control and asset quality improvement will continue, driven by healthy recoveries. Credit costs are likely to remain at normalised level and reversal of alternative investment fund provisions for certain banks could lend some support to earnings. We do not see any significant levers for the return on assets of banks to improve.

NBFCs – NIM Trends Divergent; Growth Momentum Strong!

We expect disbursements to pick up in Q4 FY24E for Affordable Housing Financiers under our coverage. While Aptus Value Housing Finance Ltd. is expected to deliver a strong 29% YoY AUM growth, Can Fin Home Finance’s assets under management growth is expected to be slower at ~12% YoY.

However, margins for both the housing financier are likely to contract. Growth outlook and commentary on margins will be keenly watched for. Disbursement growth for Vehicle Financiers is likely to remain buoyant, driving healthy AUM growth.

In terms of margins, we expect NIMs to remain largely stable QoQ with a positive bias for both Cholamandalam Investment and Sundaram Finance. Asset quality is expected to remain stable and credit costs will remain at normalized levels.

Gold Financier under our coverage (Manappuram Finance Ltd.) is expected to report strong growth in the non-gold portfolio, while gold loan growth is likely to improve QoQ, supported by higher gold prices. Gold loan yields are expected to hold up and margins are likely to improve slightly. Asset quality improvement is likely to continue.

Comments on growth opportunities owing to a ban on a leading gold financier will be keenly eyed.

Diversified NBFCs – Bajaj Finance Ltd. and MAS Financial Services Ltd. will report healthy AUM growth. However, margin pressures will continue to linger for Bajaj Finance, while MAS Financial could report steady net interest margins.

Asset quality is expected to remain stable during the quarter. The growth outlook hereon will remain a key focus area.

Diversified Financials – Broking, Credit Card Players and AMCs Credit card issuer – SBI Cards is expected to witness modest growth in terms of CIF, while spends growth is expected to moderate after a strong festive season.

NIMs are expected to contract marginally on the back of cost of fund pressures and an unchanged receivable mix. Credit costs are expected to remain elevated. Asset quality is expected to remain stable.

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