NBFCs Q3 Results Preview - Mixed Bag But Margins To Sustain: Prabhudas Lilladher

Prabhudas Lilladher Report

We expect non-banking financial companies under our coverage universe to report mixed earnings, given strong assets under management growth of ~4.25% QoQ led by vehicle financiers (commercial vehicle upcycle) and retail loans and slight moderation in margins due to rising cost of funds.

However, as a whole we expect NBFC’s under our coverage universe to report margins ~10.19% (versus 10.20% in Q2), as strong disbursements and yield transmission cushions rising cost of funds.

We expect better asset quality and flat credit cost QoQ, as collections have reached pre-Covid levels for most companies.

We expect vehicle financiers like Shriram Finance Ltd. and Cholamandalam Investment and Finance Company Ltd. to maintain their momentum (as shown in the last quarter), given strong commercial vehicle demand.

Bajaj Finance Ltd. is expected to report robust 5.7% QoQ AUM growth along with pristine asset quality, as their omni channel strategy is paying rich dividends towards customer acquisition (3.1 million new customers in Q3).

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