Housing Finance Companies Q2 Results Preview - Better Quarter With Pick-Up In Disbursals, NIM: PL Capital

PL Capital Report

For our coverage housing finance companies, assets under management could see 1.8% QoQ growth to Rs 3.5 trillion in Q2 FY25 (versus 0.9% in Q1 FY25) with disbursals likely to bounce back at 25.5% growth sequentially (versus -28.8% in Q1 FY25 as Q1 usually sees a drop due to seasonality).

Housing segment for banks may grow by 2.4% QoQ. Disbursal run-rate of LIC Housing Finance Company Ltd. is the key monitorable given weak credit flows in the last few quarters.

Net interest margin of coverage HFCs could improve QoQ to 3.14%. Hence, net interest income may inch up by 3.6% QoQ to Rs 26.5 billion.

Other income might surge by 20.6% QoQ to Rs 1.4 billion, as Aavas Financiers Ltd. usually sees a jump in off-book income in Q2, which would be more than offset by opex increase of 8.4% QoQ to Rs 4.9 billion. Hence, pre-provision operating profit could increase by 3.5% QoQ to Rs 23 billion. We see provisions normalizing to 44 bps (versus 21 bps in Q1 FY25) mainly due to LIC Housing Finance. Profit after tax might fall by 5.8% QoQ to Rs 15.3 billion.

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