Financials Q3 Results Preview - What's In Store For SFBs, NBFCs, HFCs & Ratings; Read Yes Securities' Analysis

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Yes Securities Report

Asset book composition would dictate Growth and RoE performance for our coverage companies in Q3 FY25 as the performance divide between secured and unsecured loan products would remain stark and even within various secured products the performance would differ.

Within unsecured, microfinance would remain the weakest segment with portfolios markedly contracting for third consecutive quarter and credit cost exacerbating. Elevated provisioning would continue in PL and Cards along with further tightening of acquisitions and book growth.

Vehicle financing could likely see a small growth revival with better disbursement trends in passenger vehicle, tractor, two-wheeler and used vehicles, partially aided by the festive season.

However, credit cost in vehicle finance may not materially improve on sequential basis. Growth momentum in Affordable Housing has been intact, aided by distribution augmentation and productivity improvement. Prime housing finance companies could witness a loss of business momentum due to issues in key markets of Karnataka and Telangana.

Credit cost across most HFCs should remain moderate with stable or slightly improved delinquent pool and controlled non-performing loans addition.

We assess least risk to our current FY25/26 earnings estimates for Muthoot Finance, Bajaj Finance, Home First, Aavas Financiers, Aptus Value Home and Ujjivan Small Finance Bank.

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