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Informist, Tuesday, Jul 16, 2024

By Nishat Anjum

MUMBAI – Poonawalla Fincorp Ltd is expected to report a 28% year-on-year rise in net profit for Apr-Jun at 2.90 bln rupees, estimates by five brokerages showed. The company's bottom line will be supported by healthy growth in disbursements, which will lead to a rise in assets under management.

The profit estimates by the brokering firms were in the range of 2.65 bln rupees-3.21 bln rupees. The non-banking finance company is scheduled to release its quarterly earnings Saturday.

The story may look different when it comes to the company's performance on a quarterly basis. The estimates of the broking firms suggest that the company's net profit may fall 13% sequentially, largely because of a contraction in margins. Moreover, in Jan-Mar, the company reported a one-time gain of 413 mln rupees.

"Margin is expected to remain under pressure on account of the increasing cost of borrowing and increased focus on secured products coming at lower yields," Emkay Global Financial Services Ltd said in a research report.

In its provisional data, the company told the exchanges today that its total disbursements for the June quarter rose 5% on year to 74 bln rupees. Its assets under management grew 52% on year to 269.7 bln rupees as of Jun 30.

The company's asset quality--gross net performing assets and net bad loans--are expected to improve and fall below 1.00% and 0.50%, respectively. On the liquidity front, the company continues to have ample liquidity of about 52 bln rupees as of Jun 30, it said.

For the reporting quarter, the broking firms pegged the non-bank lender's net interest income at 5.95 bln rupees, marking a 41.3% rise on year, with estimates ranging from 5.78 bln rupees to 6.08 bln rupees.

Motilal Oswal Financial Services said in a research report that it expects the company's cost ratio to improve on a sequential basis. KRChoksey Research said it sees the cost-to-income ratio at 32.9% for the June quarter, against 36.1% in Jan-Mar and 38.4% a year ago.

Emkay Global also said it expects Poonawalla Fincorp's operating expense to increase owing to its continued investment in technology and increasing its presence digitally and physically, thus resulting in a pre-provision operating profit of 4.12 bln rupees, unchanged sequentially. In Jan-Mar, total revenue from operations rose 59% on year to 9.15 bln rupees.

Key monitorables for the company would be the management's comments on growth in personal loans, and the margin. Broking firms would also keep an eye on the asset quality and credit costs. At 1453 IST, shares of the company traded 4% higher at 416.65 rupees on the National Stock Exchange.

Following are the Apr-Jun earnings estimates of Poonawalla Fincorp, in million rupees, based on reports compiled by Informist from five brokerages:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Rajeev Pai

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