NBFCs Q2 Results Preview - Likely Growth Moderation, Spread Compression To Impact Earnings: ICICI Securities

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ICICI Securities Report

For Q2 FY25, we believe non banking financial companies are likely to recalibrate their near-term growth strategies, taking cognisance of the ongoing stress in MFI/unsecured loans, regulator’s close eye on high-growth products (recent observation on gold loans, top-up home loans, etc.) and banks’ lower funding to NBFCs.

Also, for the quarter, we expect AUM growth of 4% QoQ/ 20% YoY for NBFCs under our coverage. Pre-provision operating profit for our NBFC universe is likely to expand at 3% QoQ/18% YoY, but PAT growth is likely to be relatively slower at 11% YoY and down 2% QoQ, due to pressure on credit cost (up 17% QoQ/38% YoY for our coverage universe) in light of the current environment, particularly for unsecured lenders.

In the NBFC space, we prefer Aadhar, India Shelter, Shriram Finance and Bajaj Finance.

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