Fedbank Financial Services Q4 Results Review - Expect AUM Growth To Remain At 25%: ICICI Securities

ICICI Securities Report

Fedbank Financial Services Ltd. delivered strong Q4 FY24 financial performance as reflected in 14% QoQ AUM growth, with core net interest income growing 6% QoQ and credit cost moderating to 0.6% versus 0.9% QoQ.

Change in accounting policy on income recognition of DA portfolio to net basis vs gross basis earlier and lower assigned AUM in Q4 FY24 temporarily impacted the top line. The same resulted in negative income of Rs 180 million (unwinding of DA income recognised in previous quarter) versus Rs 165 million DA income in Q3 FY24.

As a result, net revenue fell 3% QoQ. Asset quality continued to improve with gross non-performing loan falling to 1.7% versus 2.2% in Q3 FY24.

While 30 plus days past due increased sequentially to 4.5% versus 4.3%, the same remained range bound at 4.3-4.6% in the past six quarters.

Maintain Buy with an unchanged target price of Rs 184, valuing the stock at two times price-to-book value on Sep’25E BVPS.

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