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Informist, Friday, Jul 19, 2024

By Kabir Sharma

NEW DELHI – Mahindra and Mahindra Financial Services Ltd's net profit in Apr-Jun is seen rising 45% on year to 5.12 bln rupees on the back of steady growth in advances and net interest income, according to an average of estimates from 10 brokerages.

The net profit is, however, seen falling 17.4% sequentially due to a seasonal decline in disbursements. The company reported a net profit of 6.19 bln rupees in Jan-Mar despite a sharp jump in impairment of financial instruments following a fraud in one of its branches. The estimates for net profit in Apr-Jun range from 3.70 bln rupees to 6.21 bln rupees.

The company is scheduled to declare its earnings on Jul 23. Shares of the non-banking finance company ended 1.7% lower at 290.25 rupees on the National Stock Exchange today. 

The lender's disbursements rose 5% on year to 127.30 bln rupees in Apr-Jun, the company informed exchanges on Jul 2. The company's business assets as of Jun 30 were at 1.06 trln rupees, up around 22% on year.

The company's net interest income in Apr-Jun is seen rising 21% on year to 19.18 bln rupees, according to the average of estimates. The net interest income in the June quarter is seen below 19.71 bln rupees a quarter ago.

Brokerages see the company's net interest income margin staying flat sequentially. The net interest income margin for the March quarter was at 7.1%. Motilal Oswal Financial Services, however, is an outlier and expects a 5-basis-point contraction in the margin.

The lender will continue to focus on expense management, Kotak Institutional Equities said in a note. During the March quarter, the company's credit cost as a percentage of the average total assets was 1.2%. Emkay Global Financial Services expects credit costs to increase by around 65 basis points due to an increase in slippages during the quarter. 

The lender's stage-3 assets were estimated to be around 3.6%, against 4.3% a year ago as of Jun 30, provisional data showed. Stage-2 assets were estimated at around 6.1%, against 6.4% a year ago. Emkay Global expects a slight increase in net stage three assets. "We expect the coverage ratio on the stage 3 assets to be 62%, thus resulting in net stage three coming in at 1.42%," the brokerage said. The net stage three assets were at 1.28% in Jan-Mar.

The management's commentary about margins, credit costs, and loan growth will be key monitorable, brokerages said. Following are the Apr-Jun earnings estimates for Bajaj Finance based on reports compiled by Informist from eight brokerage houses: 

End

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

Edited by Saji George Titus

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