AUM growth revived coupled with NIM expansion; sustenance of AUM growth neds to be watched.
Q4FY23 Earnings Summary
NII grew 8.7% QoQ aided by expansion in NIMs. NIMs during the quarter increased by 40bps QoQ to 12.3%. Other income was up 43.3% QoQ (86.5% YoY)
Operating expenses increased (partly attributed to increase in employee count and branch addition) resulting in increase in C/I ratio of 235bps YoY / 485bps QoQ at ~33%
Provisions during the quarter came in at |75 crore vs |56 crore in Q3FY23. On QoQ basis, PAT stood steady at ₹903 crore QoQ, whereas on YoY basis it registered a de-growth of 6%.
Asset quality deteriorated as gross stage 3 assets increase from 2.58% in Q3FY23 to 3.79% in Q4FY23.
AUM growth (standalone) came in at 9% YoY to | 632098 crore while consolidated AUM was up 11% YoY at | 714968 crore. Sequentially, there was growth of 9% & 10% on a standalone and consolidated basis.
Performance of key subsidiaries continued to remain mixed as Belstar, the MFI arm, reported healthy AUM growth of 42% YoY, 16% QoQ to | 61925 crore and asset quality has improved significantly led by stage 3 assets (as % of net loans) at 2.43% vs 7.40% in Q2FY23. However, home finance Stage 3 assets were largely steady QoQ at ~4% with ~2% QoQ rise in AUM.
ICICIdirect Research view on Muthoot Finance Ltd Stock
View: The operational performance was steady despite NIMs expansion. Sustainable growth in AUM growth will be the key for re-rating. Management has guided for 14-15% AUM growth, however we need to watch how the growth pans out in coming quarters amid competition from banks and other NBFCs.
Impact: Neutral
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