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HDFC bank Q3FY25: Loan growth decline, NIMs margin stable
Equities, Markets, Research, Result Updates - February 11, 2025

HDFC bank Q3FY25: Loan growth decline, NIMs margin stable

HDFC bank Q3FY25: Loan growth decline, NIMs margin stable

About the Stock

HDFC Bank Limited is recognized as the biggest private sector bank in India in terms of assets value. The market capitalization of the bank is around Rs. 13,17,354 crore. On the basis of its large market capitalization , it is considered as the third biggest company on the Indian stock market. 

The company is active in various segments of banking which includes retail banking, wholesale banking, and rural banking. The bank has five major subsidiaries- HDFC Asset Management Company Limited (HDFC AMC), HDB Financial Services Limited, HDFC ERGO General Insurance Company Limited, HDFC Life Insurance Company Limited, and HDFC Securities Limited. 

Quarterly Update

1.Growth in net income and net profit- In the third quarter of the current financial year, the company recorded a growth of 7.7 percent YoY in net interest income which accounts to around Rs. 30,653.25 crore. HDFC also recorded a rise in PAT by 2.2 percent YoY which accounts to Rs. 16,735.5 crore. In terms of quarter-on-quarter basis, the rise in net income was about 1.8 percent. The provisions for NPAs fell to about 25 percent leading to a rise in net profit on a year-on-year basis.

  1. Robust growth in deposit ratio and slowdown in loan growth- HDFC recorded a strong  growth in its average deposit to around 15 percent YoY compared to moderate growth of gross advances by only 3 percent. It is faster than the credit growth of the bank. It acts as an aid for the bank in achieving the goal of stable credit-deposit ratio. Currently, the AUM advances growth of 7.6 percent YoY. 
  2. Slowdown in CASA- The company recorded weak CASA of only 1.1 percent QoQ growth in the third quarter of FY25. Consumers are opting more for time deposits due to economic uncertainties and high interest rates. The average time deposits surged by 22.7 percent in the third quarter.
  3. Stable Net interest Margin- In the third quarter of the financial year 2025, the company recorded a net margin of 3.43 percent compared to 3.46 in the previous quarter of the same financial year. It accounts for marginal decline. 
  4. Marginal increase in GNPA and NPA- The company recorded growth in GNPAs  to about 1.42 percent higher than the 1.36 percent in the previous quarter of the current financial year. Also, the company recorded a net NPA increase of about 0.46 percent compared to its net NPA growth of 0.41 percent in the second quarter of the current financial year. The reason for this is hike in GNPA and NPA is the seasonal slippage.
Years (In Cr) Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest Income 76006.88 70582.61 7.7% 74016.91 2.7%
Interest Expenses 45353.63 42111.27 7.7% 43903.01 3.3%
NII 30653.25 28471.34 7.7% 30113.9 1.8%
Other income 11453.56 11137.04 2.8% 11482.73 -0.3%
Total net income 42106.81 39608.38 6.3% 41596.63 1.2%
Employee Cost 5950.41 5351.76 11.2% 5985.3 -0.6%
Other expenses 11156 10609.32 5.2% 10905.59 2.3%
Tota Opex 17106.41 15961.08 7.2% 16890.89 1.3%
PPOP 25000.4 23647.3 5.7% 24705.74 1.2%
Provision 3153.85 4216.64 -25.2% 2700.56 16.8%
PBT 21846.55 19430.66 12.4% 22005.18 -0.7%
Tax Expenses 5111.05 3058.12 67.1% 5184.31 -1.4%
Tax Rate% 23% 16% 48.6% 24% -0.7%
PAT 16735.5 16372.54 2.2% 16820.87 -0.5%
PAT% 22% 23% -5.1% 23% -3.1%
EPS 21.88 21.40 2.2% 21.99 -0.5%
No. of shares 765 765 765

Commentary

  1. The company recorded contraction in provisions of NPAs to around 25 percent leading to rise in net profit in the third quarter of FY25. The reason for this is wholesale credit segment performing well. Earlier, the contingent provision was set aside for its wholesale account. As it was unutilised due to performing assets in the segment, the company recovered it.
  2. The growth in deposit ratio is mainly driven by rise in retail term deposits rather than CASA ratio. The consumers’ preference towards term deposits was high in the third quarter due to the high interest rate and market condition in the economy. The management is also focused on holistic customer relationships. It believes CASA will gain again when changes in the interest rate take place.
  3. The loan portfolio of HDFC recorded contraction in credit growth by 10.4 percent YoY in corporate and other wholesale segments. While, the growth in credit creation of the commercial and rural banking segment was 11.6 percent. Apart from this, the growth in retail loans was about 10 percent due to cautious steps taken by the company in the midst of growing uncertainties in the economy. The growth in retail credit is mainly driven by growth in retail non-mortgages by about 10.5 percent YoY compared to 9.7 percent YoY in the retail mortgages segment. Overall, it aids in the company’s steps to stabilize its credit-to deposit ratio in the upcoming to 2 to 3 years.  
  4. 4. The growth in NIM margin is stable and fairly in range of its trend in previous consecutive quarters. The reason for this is a cautious approach towards loan growth and focus on deposit growth. It is also due to the shift of consumers towards retail term deposits in the scenario of macroeconomic uncertainty and high interest. This cautious approach of the bank can possibly lead to stable NIMs in the upcoming terms as well. 

Key Concall Highlights of 3QFY25
• HDFC Bank Ltd underlines some of the prevailing macroeconomic conditions such as moderate growth in demand at
urban levels, tightening of liquidity, depreciation of rupee, sluggish growth in private capital investment, and rise in
capital outflows in the midst of growing uncertainties in the world.
• Some positive indications like rise in government expenditure and also expansion in rural demand in the economy is
observed. It resulted in strong growth in service exports and inflation levels are gradually slowing down.
• Robust growth in deposit ratio to about 15 percent mainly driven by retail term deposits. While, slowdown in CASA
ratio and loan growth. It is expected to achieve stability in credit‐to‐deposit ratio in the upcoming 2 to 3 years.
• The employee headcount of the rose again by 2,10,000 in the 3Q compared to its contraction in 2Q of the current
financial year. The company is currently focused on increasing productivity of the employees.
• Addition of more than 1,000 branches YoY in the 3QFY25 and still able to maintain growth in cost at around 7 percent.
It indicates productivity gains for the company.
• Post‐merger of the company, the company manages to open about 1.9 million fresh accounts. It indicates the success
of the merger.
• The company aims to make investment in branches, people and technology. It expects to grow at a similar pace in the upcoming financial year 2026 and higher in the financial year 2027.

Valuations

In present times, the stock of HDFC is trading at multiple of 19.1 x  91.3 EPS at the CMP of Rs. 1,759. In book terms, trading  2.90x than its book value of Rs. 601  As of today, the ROCE and ROE of the company is at 7.67 percent and 17.1 percent, respectively. The company is progressive in terms of its strategy to expand deposit levels and is supported by hike in retail term deposits and moderate loan growth.

Investment Rationale

  • According to the Economic Survey of 2024-2025, the monetary and financial sector in India has recorded a robust performance in the first three quarters of the financial year 2025. Overall, the growth of bank deposits was in double-digit. 
  • According to the recent RBI report,  the banking sector in India recorded profitability for the sixth year in a row in the financial year 2023-24. It is anticipated to record profitability in the current financial year as well.  Also, the GNPAs of the Indian banking sector went down to 2.7 percent which  is the lowest since the last 13 years. It indicates an improvement in the asset quality of the banks 
  • In the first half of the current financial year, Indian banks are recording a continued rise in their Return on Assets and Return on Equity by 1.4 percent and 14.6 percent, respectively.  Apart from this, the scheduled commercial banks in India (including 21 private sector banks and excluding RRBs) recorded growth in their consolidated balance sheet 15.5 percent in the financial year 2023-2024. 
  • In the budget 2025, the decision of tax relief up to Rs. 12.75 lakh income is not only expected to drive consumption in the economy but also increase deposits levels of the banks to more Rs. 40,000 to 45,000 crore. It is anticipated to aid in mitigating liquidity issues of the banking sector.  
  • In terms of growth of HDFC Bank, the growth of the deposit ratio of the company is also increasing like the overall growth of deposit levels of the banking sector. It accounts for 15 percent YOY in the third quarter.  After the company’s merger in the year 2023, the company planned a goal to contract its loan-deposit ratio in the upcoming 2 to 3 years and to bring better financial stability in the company. 
  • Its result in the third quarter of FY25 indicates its progressive steps towards lowering loan-deposit ratio. Currently, the credit to deposit ratio is around 98 percent. The company believes that it will grow in line with the industry growth in the upcoming financial year and higher in the financial year 2027.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Budget 2025: Aims for expansion in consumption demand through tax reforms
Equities, Markets - February 3, 2025

Budget 2025: Aims for expansion in consumption demand through tax reforms

Budget 2025: Aims for expansion in consumption demand through tax reforms

With the aim to give relief to the middle class population of India and to also boost consumption and savings in the country, the finance ministry declared tax relief to income upto Rs. 12.75 lakh in the Budget 2025. Consumption is one of the important factors for the growth of the country.

Many reforms were taken into consideration in the current budget which ranges from boost to the agricultural sector, MSMEs, electronics, leather and toy industry. However, the one which gained the most significance was implementation of tax relief reform. It came with the idea to increase the disposable income of the consumer which in turn will expand consumption levels in the economy. This relief is expected to result in a reduction of higher than 100,000 crore of direct tax collection.

Along with reduction in taxes, the government focuses on capital expenditure of about Rs. 11.2 lakh crore for the financial year 2026. It aims to reduce fiscal deficit and bring fiscal consolidation in the economy.

The government aims to take steps for boosting consumption demand in both urban and rural areas.

Elimination of Generation disparity
The tax reforms by raising the limits for both tax collection and tax deduction have resulted in benefits for different generations of the population. It is able to address the demands and needs of different ranges of population. The tax exemption turned out to be good for both landlords and the senior citizen population in the country due to the rise in the tax deductions limit. For instance, the senior citizen can avail benefits from interest income till Rs. 1 lakh , which is present only Rs. 50,000 without tax deductions. It will not only give senior citizen population more money for use but also increase deposit and enhance credit to deposit ratio of Indian banks. In case of landlords, it gives tax exemption rise to 6 lakh compared to current Rs. 2.4 lakh annually. It will boost the rental market in the country, particularly metro cities around India.

It is helpful for parents sending their wards to foreign countries for acquiring education and for travellers also due to the rise in the limit of tax collection. The changes are made in the liberalised remittance scheme as a rise in tax on Rs. 10 lakh which is currently Rs. 7 lakh. In the current budget, tax on education loans are eliminated completely.

Also, more people are expected to opt for the new tax regime which is anticipated to be 63 million for the financial year 2025 and higher in the upcoming financial year 2026.

Impact of the tax relief
High disposable incomes encourage the purchasing power of the consumers in the economy. Its benefits to the population is better accessibility to expensive healthcare facilities and education, and also to essential commodities.

It will promote growth of major sectors like Hospitality, Auto, Travel and Leisure, FMCG and Automobile. It will also bring growth in the BFSI sectors in terms of credit creation and credit cards.

The staple firms are considered to mostly get the advantage of the expansion in disposable income. The reason for this is people shift towards purchasing important commodities. Along with this, consumer segments like liquor, quick service restaurants (QSR) and innerwear anticipated to observe a rise in consumption demand. The most significant one was relief to cigarette manufacturers due to no hike in taxation rates.

Challenges in the economy
The rise in disposable income can lead to change in the historical trend of tax-saving schemes. The current reform can certainly create a hike in consumption levels but it can also affect the growth of the economy in the long-run. The historical trend of NPS has indicated that it not only helps a person but also enhances the benefits of the nation.

Even though the reason behind taxation relaxation is to raise consumption level, the questions arise of whether consumers would really spend their incomes. In the scenario of tax cuts, the capex plan of the government slightly increased to about Rs. 11.2 lakh crore compared to previous capex of Rs. 11.1 lakh crore. It indicates restricted growth in capital goods and infrastructure sectors of India. Consumer-driven sectors is likely to earn more than infrastucture and capital goods sector. Reduction in capex does not promote growth in the economy like increase in capex does. Thus, reduction in capex is a more crucial subject for the economy than the relaxation of taxes for the population.

Impact on the market
In the trading session of the 2nd February, the consumption-driven stocks observed a surge in the market. Many investors believe that the rise in disposable income will lead to a hike in consumption level in consumer products, electronics, cars and other non-essential products.

In the market, Nifty Auto index and Nifty Realty index surged to 1.9 percent and 3.4 percent, respectively. Also, both the Consumer Durables index and FMCG index recorded a rise of around three percent. In contrast to this, the benchmark Nifty recorded a fall by 0.1 percent in the market.

In terms of stocks of the companies, the expansion in the stocks of Zomato and Dmart by 6.7 percent and 8.7 percent, respectively. Also, companies like Tata consumer, ITC, Bajaj Auto, Maruti Suzuki, and Eicher Motors recorded a rise in the market in the range of 3 percent to 5 percent.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Maruti Suzuki sets the target of regaining 50 percent auto market share in India
Autos, Equities, Markets, Research, Result Updates - January 30, 2025

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Maruti Suzuki Q3FY25: Strong Revenue Growth and Record Exports, But Margin Pressure Remains

Company Name: Maruti Suzuki India Ltd | NSE Code: MARUTI | BSE Code: 532500 | 52 Week high/low: 13,680 / 10,204 | CMP: INR 12,000 | Mcap: INR 3,77,433 Cr | P/E- 25

About the stock
➡️Maruti Suzuki India Ltd. is the largest passenger vehicle manufacturer in India, holding a dominant market share of over 40%. The company, a subsidiary of Suzuki Motor Corporation (Japan), offers a diverse portfolio ranging from entry-level hatchbacks to premium SUVs.

➡️It has a strong distribution network with over 4,000 touchpoints across the country. Maruti is also expanding into green mobility, with a growing focus on EVs, hybrids, and CNG models. The company has a significant export presence, catering to markets in Africa, Latin America, and the Middle East.

Strong Revenue Growth Led by Record Exports
➡️Maruti Suzuki delivered an in-line performance for Q3FY25, reporting net sales of ₹35,535 crore, up 15.7% YoY, driven by higher volumes (+13% YoY) and better realisation (+2.4% YoY). The company achieved its highest-ever exports in a quarter, with volumes rising 38% YoY, primarily supported by strong demand in Africa, Latin America, and the Middle East.

➡️Domestic sales increased by 9% YoY, aided by festive demand and growing preference for premium models. Despite these positives, realisation declined sequentially, reflecting a higher mix of entry-level models and discounting measures.

EBITDA Margin Under Pressure Due to Higher Costs
➡️Despite strong revenue growth, EBITDA declined to ₹3,890 crore, with the EBITDA margin contracting by 15 bps YoY to 11.3%, impacted by higher raw material and staff costs. However, raw material costs eased sequentially by 33 bps, offering some margin support.

➡️The average discount per car increased to ₹30,999, compared to ₹29,300 in the previous quarter, highlighting the need for promotional efforts to sustain sales momentum in the entry-level segment.

Demand Outlook: Strength in Premium Segment, Weakness in Entry-Level Cars
➡️The demand outlook remains favorable, particularly in rural markets where demand growth is outpacing urban regions. However, the entry-level segment continues to face softness, which may limit domestic volume expansion and necessitate higher sales promotions and discounts. The premium segment, particularly utility vehicles (UVs) and mid-size models, saw strong traction, contributing 20% and 17.6% to total domestic sales, respectively. This aligns with broader industry trends, where SUVs and high-end vehicles are gaining share.

Expanding EV & Green Vehicle Portfolio
➡️Maruti Suzuki has officially entered the EV market with the launch of E-Vitara, which will be manufactured exclusively by the company and exported to over 100 countries. Alongside its EV push, the company remains bullish on CNG vehicles, which now contribute one out of every three vehicles sold, reflecting a clear shift towards green mobility solutions.

Valuation and key metrics
➡️Maruti Suzuki is currently trading at 25x FY26 earnings, which is at a premium to Hyundai (22.2x) but justified by its market leadership, strong export growth, and expanding premium portfolio. The company’s return profile remains healthy, with a Return on Equity (ROE) of 13.8% and a Return on Capital Employed (ROCE) of 17.2% for the trailing twelve months (TTM). Additionally, its interest coverage ratio stands at 87.5x, indicating a strong balance sheet with minimal leverage concerns.

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Renewable Energy Sector Awaits Budget 2025 for Key Support Measures

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Shriram Finance Q3FY25: Strong Loan Book Growth, PAT Boosted by Exceptional Gain, NIMs Contract
Equities, Markets, Research, Result Updates - January 27, 2025

Shriram Finance Q3FY25: Strong Loan Book Growth, PAT Boosted by Exceptional Gain, NIMs Contract

Shriram Finance Q3FY25: Strong Loan Book Growth, PAT Boosted by Exceptional Gain, NIMs Contract

Company Name: Shriram Finance Ltd | NSE Code: SHRIRAMFIN | BSE Code: 511218 | 52 Week high/low: 730 / 439 | CMP: INR 512 | Mcap: INR 96,205 Cr | P/BV – 1.88

About the stock
➡️Shriram Finance Ltd., a significant entity within the Shriram Group, operates extensively in consumer finance, stock broking, distribution, life insurance, and general insurance. Founded in 1979, the company stands as India’s largest non-bank financial company (NBFC) in retail asset finance. It is a leader in structured financing of used commercial vehicles and two-wheelers, specializing in serving small business owners and road transport operators.

Robust loan book growth backed by healthy growth in CV, PV and MSME
➡️Shriram’s loan book has grew by double digit at 19% YoY (+5% QoQ) to 2,54,470 Cr supported by growth in CV, PV and MSME segment.

➡️Commercial vehicle constitute 45% of the overall loan book, growing by 13% YoY (+3% QoQ) to 1,15,767 Cr. Passenger vehicle segment constitute 20% of overall segment, growing by 25% YoY (+6% QoQ) to 51,884 Cr. While MSME segment constitute 14% of overall segment, growing by healthy growth of 50% YoY (+7% QoQ) to 34,632 Cr. This three segment led the solid growth in overall loan book in Q3FY25.

➡️Rest other segment report good growth but command a low weight in overall loan book. Construction equipment grew at 10% YoY followed by Farm equipment at 42% YoY, 2W at 27% YoY, gold at -7% while personal loan degrow by 9% YoY.

➡️Borrowing overtake the loan growth, increased by 26% YoY (+8% QoQ) to 2,235 bn driven by deposit growth of 24% YoY (+6% QoQ).

Book Growth (As on)  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Loan 2,54,470 2,14,233 19% 2,43,043 5%
Borrowings (bn) 2,235 1,775 26% 2,078 8%
Deposit (bn) 534 431 24% 502 6%

Double digit growth in NII backed by loan book expansion; while NIMS down 50 bps
➡️NII report a double digit healthy growth of 14% YoY (+2% QoQ) to 5,590 Cr driven by loan book expansion only while NIMs contract for the quarter. NIMs down by 50 bps YoY (-26 bps QoQ) to 8.48% due to the expansion in CoF.

➡️PPOP jump 11% YoY (+2% QoQ) to 4,085 Cr, Operating efficiency benefit lagged as total OpEx increased 22% due to rise in employee cost and other expense.

➡️PAT boost by 96% YoY (+72% QoQ) to 3,570 Cr on one time exceptional gain of 1,657 Cr. PAT excluding exceptional item report 5% YoY and on QoQ degrow 8%.

Years  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest income  10,341 8,618 20% 9,815 5%
Interest expenses 4,751 3,707 28% 4,350 9%
NII 5,590 4,911 14% 5,464 2%
Other income  365 309 18% 282 29%
Total Net income 5,954 5,220 14% 5,746 4%
Employee expenses 970 810 20% 907 7%
Other OpEx 899 721 25% 853 5%
Total Opex  1,869 1,531 22% 1,760 6%
PPOP 4,085 3,689 11% 3,987 2%
Provision 1,326 1,250 6% 1,235 7%
Exceptional items 0 0
PBT 2,759 2,440 13% 2,752 0%
Tax expenses  846 621 36% 680 24%
Tax rate  31% 25% 20% 25% 24%
PAT  1,913 1,818 5% 2,071 -8%
PAT% 18% 20% -12% 21% -13%
EPS 10.17 9.68 5% 11.02 -8%
No. of equity shares  188 188 0% 188 0%

Asset quality improved YoY; QoQ remain stable
➡️Shriram’s asset quality has been improved during the quarter as GNPA and NNPA are in downward trajactory. GNPA/NNPA decline 28 bps/ 4 bps YoY while QoQ basis remain stable to stood at 5.38%/2.68% as of Q3FY25.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
GNPA 5.38 5.66 -28 5.32 6
NNPA 2.68 2.72 -4 2.64 4

Valuation and Key metrics
➡️Currently the stock is trading at 1.88x price to book value. NIMs contract by 50 bps YoY and 26 bps QoQ to 8.48% led by the expansion in CoF. ROA dissapoint down by 23 bps YoY and QoQ both to 2.88% while ROE down 13 bps YoY and 59 bps QoQ 16%. Company capital position CAR remain stable YoY to stood at 21% but still above the RBI guidelines.

Key metrics  Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
NIMs 8.48 8.99 -51 8.74 -26
ROA 2.88 3.11 -23 3.06 -18
ROE 15.41 15.54 -13 16 -59
PCR 0 51.7 -5170
CAR 21 21.01 -1 20.16 84

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Budget needs to focus on local infrastructure

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LTFH Q3FY25: Retail Growth Shines Despite Profit Hit from Higher Provisions
Equities, Markets, Research, Result Updates - January 23, 2025

LTFH Q3FY25: Retail Growth Shines Despite Profit Hit from Higher Provisions

LTFH Q3FY25: Retail Growth Shines Despite Profit Hit from Higher Provisions

Company Name: L&T Finance Ltd | NSE Code: LTF| BSE Code: 533519 | 52 Week high/low: 194 / 129 | CMP: INR 139 | Mcap: INR 34,758 Cr | P/BV – 1.44

About the stock
➡️LTFH is leading NBFC cater diversified financial lending prodcut in both rural and urban areas. Its offer consumer loan, 2W loan, home loan, MFI, farm and SME loans. Distribution network remain strong with 13,200+ distribution touch point, pan India presence in 2 lakh villages/100+ citiesand cover 18 states in India.

Reatil book shine up (23% YoY) led by 2W, HLand MFI segment
➡️LTF retail loan book has been contributing 97%> of overall loan book, company achieveing its FY2026 lakshya goal. Retail book grew 23% YoY (+4% QoQ) to 92,224 Cr driven by 2W, HL and MFI segment. 2W book contribute 14% of retail book, growing 21% YoY and MFL contribute 28% of retail book, growing 14% YoY and Home loan contribute 20% of retail book, growing 37% YoY in Q3FY25.

➡️The total book increased by 16% YoY (+2% QoQ) to 95,120 Cr led bt strong growth in retail book.

➡️Whole sale book report degrowth by 59% YoY growth but its weight has been reduce to only 3% in overall loan book in Q3FY25.

➡️Retail disbursement grew 5% YoY (+1% QoQ) to 15,210 Cr led by 2W and home loan segment. While MFL shake the disburesement growth down by 16% YoY and its contribute 29% of retail disbursement.

➡️Company’s borrowing growth in line with credit growth. Borrowing grew at 13% YoY to 86,161 Cr during the quarter.

NII grew on book growth, PAT down on higher provision
➡️Interest income grew 15% YoY (+4% QoQ) to 3,806 Cr driven by robust retail book growth and while yield decline by 56 bps YoY. NII increased 15% YoY (+3% QoQ) to 2,237 Cr attributed to book expansion while NIMS contract by 47 bps YoY.

➡️PPOP grew robust at 16% YoY (+4% QoQ) to 1,553 Cr thanks to higher other income and stable other OpEx. Profitability suffered decline 23% YoY (-10% QoQ) to 626 Cr due to higher provision expense (up 117% YoY).

Asset quality dissapoint on QoQ basis
➡️LTFH asset quality has maintain on YoY basis and sequentailly. GNPA up 2 bps YoY and 4 bps QoQ to 3.23% while NNPA dissapoint YoY as well as sequentially by 16 bps/1 bps to 0.97%. Its normal effect due to the lower base on last quarter while NNPA below the management target of 1% till FY26.

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.44 Price to book value. Yield on loan down 56 bps to 15.04% while CoF remain stable at 7.83% YoY. This result in contraction in NIMs by 47 bps to 8.5% as of Q3FY25. credit cost remain stable at 2.49% YoY while decline by 10 bps QoQ.

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Impact of Trump 2.0 on Indian Equity Market

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HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth
Equities, Markets, Research, Result Updates - January 22, 2025

HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth

HUDCO Q3FY25 Results Update: Robust Performance Drives Strong Growth

Company Name: Housing & Urban Development Corporation Ltd | NSE Code: HUDCO | BSE Code: 540530 | 52 Week high/low: 354 / 145 | CMP: INR 227 | Mcap: INR 45,551 Cr | P/BV – 2.66

HUDCO delivered an exceptional performance in Q3FY25, with its Profit After Tax (PAT) surging to INR 7.35bn, surpassing estimates of INR 6.32bn. The PAT grew by 6.7% QoQ and an impressive 41.6% YoY, driven by robust business momentum, strong Net Interest Income (NII), and significant provision writebacks due to marked improvement in asset quality.

Strong Net Interest Income and Stable Margins
NII for the quarter came in at INR 9.83bn, well above expectations of INR 8.32bn, reflecting growth of 23.3% QoQ and 47.3% YoY. This stellar growth was fueled by healthy interest income, supported by stable Net Interest Margins (NIM) at 3.19% for 9M FY25, compared to 3.2% in the same period last year.

Record AUM Growth Driven by Urban Infrastructure
The company’s Asset Under Management (AUM) reached a historical high of INR 1,189.3bn, growing 7.1% QoQ and 40.9% YoY, exceeding expectations. Urban Infrastructure emerged as the key driver, growing 6% QoQ and 72% YoY, and now accounts for 60% of AUM. Meanwhile, the Housing segment showed subdued growth of 8% QoQ and 11% YoY, though it is expected to gain momentum in Q4FY25 with disbursements under the Pradhan Mantri Awas Yojana (PMAY).

Resilient Disbursements Despite Prior Glitch
Disbursements for the quarter stood at INR 100.6bn, registering an 11% QoQ growth following a temporary setback in Q2FY25. Urban Infrastructure disbursements were particularly robust, rising to INR 98.5bn, an increase of 22% QoQ and an astonishing 189% YoY. However, Housing disbursements remained subdued at INR 2.1bn, witnessing a decline of 78% QoQ and 66% YoY.

Moderate Sanctions and Declining Other Income
Sanctions for the quarter were recorded at INR 156.8bn, a significant 53% YoY growth, although they declined by 75% QoQ from the record levels seen in Q2FY25. Other income witnessed a decline of 63.8% QoQ and 43.5% YoY, amounting to INR 242mn.

Efficient Cost Management and Operating Performance
Operating expenses for Q3FY25 came in at INR 925mn, down 4.9% QoQ but up 26.5% YoY. The cost-to-income ratio improved to 9.2% from 11.3% in Q2FY25, reflecting better efficiency. Pre-Provision Operating Profit (PPoP) stood at INR 9.1bn, significantly above estimates of INR 8bn, with a growth of 19.3% QoQ and 43.5% YoY.

Improvement in Asset Quality and Recoveries
Asset quality saw a notable improvement, with Gross Non-Performing Assets (GNPAs) declining to 1.88%, down 16bps QoQ and 126bps YoY. Absolute GNPA stock reduced by 2% QoQ and 16% YoY, to INR 22.3bn. During FY25, the company resolved four long-pending NPA accounts, recovering INR 2.6bn, bringing total recoveries to INR 4.6bn, including INR 1.7bn from six government agencies.

Status of Stressed Accounts
HUDCO continues to address stressed accounts, with INR 12.2bn worth of consortium projects under NCLT resolution and INR 0.35bn of projects outside NCLT, both fully provided for. For non-consortium projects, INR 0.3bn is under NCLT, while suit-filed or DRT cases involve projects worth INR 4.3bn, all with 100% provisions.

Valuation and Outlook
At the current market price, HUDCO is trading at an FY27E PABV of 1.9x. With a strong growth trajectory, improvement in asset quality, and robust performance in key segments, the company is well-positioned for sustained growth. We maintain our conviction BUY rating and will revisit our estimates in light of these outstanding results.

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Easing of risk weights on loans given to MFIs and NBFCs
Business, Equities, Markets, Research, Result Updates - January 22, 2025

South Indian Bank Q3FY25: Moderate NII, Robust Profitability, Improved Asset Quality

South Indian Bank Q3FY25: Moderate NII, Robust Profitability, Improved Asset Quality

Company Name: South Indian Bank Ltd | NSE Code: SOUTHBANK | BSE Code: 532218 | 52 Week high/low: 36.9 / 22.3 | CMP: INR 26.8 | Mcap: INR 7,014 Cr | P/BV – 0.79

NII Moderate; strong Profitability; NIMs flat; Asset quality improved

About the Stock
➡️South indian bank is private sector bank operate in south region of India headquartered in kerala. The bank has 950 branch network and majority situated in south India. The customer bas has increased from 7.3 Mn to 7.8 Mn within one year period. The bank loan book is well diversified 40% with corporate and remaining 60% retail book includes perosnal, agri and business.

Strong growth in Advances and Disbursement in Q3FY25
➡️The bank has reported strong growth annually in key business parameter. Gross Advances grew 12% YoY to 86,966 Cr, with corporate segment contributing 40% of the loan book, growing at 17% and personal segment contribute 26%, growing at same pace 26% while business loan and Agriculture contribute 15% and 19% respectively.

➡️Disburement grew 86% YoY to 1,22,572 Cr led by corpoarte book. While the bank deposit lagging behind, increased by 6% YoY and borrowings decline 30% YoY. The CASA stand at 31.15% in Q2FY25 lower by 65 bps YoY.

➡️Personal segment loan book driven by growth in mortgage loan at 79% folowed by home loan loan at 64%, gold loan 10%, auto loan 25% and credit card 4%.

➡️Retail disbursement momentum help by home loan, auto loan while agriculture and personal loan remian flat annually.

Book Growth (As on)  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Advances  86,966 77,686 12% 84,714 3%
Disbursement  1,22,572 65,805 86% 76,872 59%
Borrowings  2,956 4,213 -30% 2,609 13%
Deposit 1,05,387 99,155 6% 1,05,452 0%


NII growth moderate while PAT jump 12% led by lower opex and tax expense
➡️Interest income increased by 9% YoY (+1% QoQ) to 2,371 Cr driven by yield expansion and advance growth. The yield on loan expand 11 bps YoY to 7.64% while Cost of fund jump 13 bps to 4.84% result contraction in NIMs.

➡️NII grew moderate at 6% YoY (-1% QoQ) to 869 Cr due to high expansion in CoF makes NIMs flat.

➡️The bank’s PAT surged 12% YoY (+5% QoQ) to 342 Cr led by lower operating cost and tax expense despite the jump in credit cost. The stable the employee cost and total operating cost kick in operating leverage and boost the profitability.

Years  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest income  2371 2184 9% 2,355 1%
Interest expenses 1501 1365 10% 1,472 2%
NII 869 819 6% 882 -1%
Other income  447 452 -1% 449 -1%
Total Net income 1316 1271 4% 1,332 -1%
Employee expenses 415 460 -10% 421 -2%
Other OpEx 373 328 13% 360 3%
Total Opex  788 788 0% 782 1%
PPOP 529 483 9% 550 -4%
Provision 66 49 36% 110 -40%
PBT 463 435 6% 440 5%
Tax expenses  121 130 -7% 116 5%
Tax rate  0 0 -12% 26% 0%
PAT  342 305 12% 325 5%
PAT% 12% 12% 5% 12% 5%
EPS 1.31 1.46 -10% 1.24 5%
No. of equity shares  262 209 25% 261 0%

Asset quality enhanced; stress book reduce
➡️Company has reduced the stress assets from 894 Cr in Q3FY24 to 404 Cr in Q3FY25. Bank has churned 78% of overall loan book since covid level and 91% current GNPA from old book. GNPA/NNPA stood at 4.43%/1.25% decline by 44bps/36 bps YoY (10bps/6 bps QoQ). Slippages ratio decline to 0.33% in Q3FY25 vs 0.34% in Q3FY24. The provision coverage ratio expand 310 bps YoY to 81.07% vs 77.97% in Q3FY24.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
GNPA 4.3 4.74 -44 4.40 -10
NNPA 1.25 1.61 -36 1.31 -6

Valuation and Key metrics
➡️Currently the stock is trading at 0.79 price to book value. The yield on advances jump 11 bps to 7.64% while CoF up by 13 bps YoY to 4.84%. This result in flat in NIMs at 3.19%. The increased in deposit rate to maintain and increased the deposit growt led to higher CoF and contract NIMs as Yield is stable.

Key metrics  Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
Yield 7.64 7.53 11 7.68 -4
CoF 4.84 4.71 13 4.80 4
NIMs 3.19 3.19 0 3.24 -5
ROA 1.12 1.07 5 1.07 5
ROE 13.93 16.38 -245 13.71 22
CASA  31.15 31.8 -65 31.8 -65
PCR 81.07 77.97 310 80.72 35
CAR 18 15.6 240 18.04 -4

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Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

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Contraction in Banking Stocks to around 6 percent due to RBI's repo rate cut
Equities, Markets, Research, Result Updates - January 22, 2025

Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

Jana SFB Q3FY25: Strong Secured Loan Growth, Margins Under Pressure

Company Name: Jana Small Finance Bank Ltd | NSE Code: JSFB| BSE Code: 544118 | 52 Week high/low: 761 / 364 | CMP: INR 430 | Mcap: INR 4,509 Cr | P/BV – 1.25

Abouth the stock
➡️Jana SFB is leading small finance bank engaged in providing MSME loan, affordable housing loan, 2W loan, gold loan, Micro LAP etc. Jana SFB has rapidly expanded network with 778 banking outlet including 252 outlet in unbanked rural centres, in 22 states/ 2UTs while serving 4.6 Mn active customers.

Robust Advance growth thanks to secured book
➡️Jana’s total advance book grew 18.5% YoY (+6% QoQ) to 27,984 Cr thanks to the secured book. Secured book at 68% of the Jana total book report a growth of 35.8% YoY (+11.9% QoQ) to 19,085 Cr while Unssecured book down at 6.90% YoY and de-growth 4.80% QoQ to 8,899 Cr. Secured book contribution jump from 60% in Q3FY24 to 68% in Q3FY25 and management further planning to increased its weight in overall book.

➡️Healthy growth of secured book attributed to affordable housing (up 39.1% YoY) and Micro LAP (up 22.5% YoY) segment. This both combines cross the milestone of 11,000 Cr. 2W and gold loan also report a sound growth of 108.8% and 127.9% YoY but have low weightage in overall book. MSME and term loans to NBFCs grew 15.5% YoY and 33.4% YoY respectively.

➡️Deposit growth higher than advance growth at 24.4% YoY to 25,865 Cr while CASA as % of total deposit decline to 18.4% in Q3FY25 vs 18.8% in same quarter previous year.

Book Growth (As on)  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Advance  27,984 22806.96 18.50% 26304.96 6%
Secured  19,085 12252.57 35.80% 16813.89 11.90%
Unsecured 8,899 9513.031 -6.90% 9326.152 -4.80%
Deposit 25,865 19553.94 24.40% 24752.81 4.30%

NII grew single digit on solid advance growth while NIMs contact
➡️Interest income grew 13% YoY and remain flat on QoQ to 1,177Cr led by solid secured book growth while yield down 10 bps YoY (+20 bps QoQ) to 17.4%.
➡️NII grew 8% YoY to 593 Cr with support of advance growth while CoF expand and NIMs decline. On QoQ NII remain flat led to modest growth of book on QoQ and NIMs contraction.
➡️PPOP report -5% YoY and -7% to 279 Cr due to higher operating expenses. PAT down 18% YoY and sequentially 14% to 111 Cr led by higher provision growth.

Years  Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Interest income  1,177 1,038 13% 1,166 1%
Interest expenses 585 490 19% 572 2%
NII 593 548 8% 594 0%
Other income  177 140 27% 176 1%
Total Net income 770 688 12% 770 0%
Employee expenses 309 245 27% 296 5%
Other OpEx 181 148 22% 175 4%
Total Opex  491 393 25% 471 4%
PPOP 279 295 -5% 299 -7%
Provision 174 161 8% 210 -17%
PBT 105 135 -22% 89 18%
Tax expenses  5 0 -8 -167%
Tax rate  5% 0% -9% -156%
PAT  111 135 -18% 97 14%
PAT% 8% 11% -29% 7% 13%
EPS 10.49 18.3 -43% 9.28 13%
No. of equity shares  10.47 7.36 42% 10.45 0%

Asset quality tempered on YoY basis
➡️Jana asset qaulity has been decline due to the stress in the MFI segment. GNPA/NNPA jump 65 bps/24 bps YoY while on QoQ down 15/4 bps 2.71%/0.91%. Net NPA has 82% secured loan which signifies higher chances of recovery.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
GNPA 2.71 2.06 65 2.86 -15
NNPA 0.91 0.67 24 0.95 -4

Valuation and key metrics
➡️Currently the stock is trading at multiple of 1.25 price to book value and book value per share stood at 342 Rs. Yield decline 10 bps YoY (+20 bps QoQ) to 17.4% while CoF jump 40 bps YoY and down 5 bps on QoQ to 8.03%. Yield contraction is led by competitive environment and challenges in MFI segment while CoF expansion driven by increase in deposit rate for attracting retail deposit. This result in decline in NIMs by 30 bps YoY and 10 bps QoQ to 7.6%. Return ratio dissapoint as ROE and ROA down by 670 bps and 20 bps YoY. Company’s capital position remain solid with 18.4% Capital adequacy ratio.

Asset Quality Q3FY25 Q3FY24 YoY (bps) Q2FY25 QoQ (bps)
Yield 17.4 17.5 -10 17.2 20
CoF 8.03 7.64 39 8.08 -5
NIMs 7.6 7.9 -30 7.7 -10
ROA 1.5 1.7 -20 1.2 30
ROE 13.5 20.2 -670 10.2 330
PCR 66.9 6690 67.2 -30
CAR 18.4 16.3 210 18.8 -40
CASA 18.4 18.8 -40 20.1 -170

Management Guidance for FY25
➡️Management expect overall 20% growth in AUM and deposit in FY25.
➡️PAT growth of 30%-40% in FY25 will led by advance and disbursal growth.
➡️ROA and ROE maintained at 1.8% -2% and 19%-21% respectively. Company will continue to increase the secured business led to decline in NIMs.

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Zomato Q3FY25: Strong GOV Growth Amid Profitability Pressures
Business, Equities, Markets, Research, Result Updates - January 21, 2025

Zomato Q3FY25: Strong GOV Growth Amid Profitability Pressures

Zomato Q3FY25: Strong GOV Growth Amid Profitability Pressures

Company Name: Zomato Ltd | NSE Code: ZOMATO| BSE Code: 543320 | 52 Week high/low: 305 / 127 | CMP: INR 212 | Mcap: INR 2,04,829 Cr | P/E – 309

About the Stock
➡️Zomato is engaged in multiple business vertical segment such food delivery, quick commerce (Blinkit), going out and B2B supplies. Company has done rapid expansion in quick commerce segment by adding 368 net new stores in Q3FY25.

GOV shoot up led by all segment (up 57% YoY /14% QoQ)
➡️Zomato’s gross order value grew healthy across all the segment. GOV (B2C business) increased 57% YoY (+14% QoQ) to 17,671 Cr thanks to all segment. This growth is attributed to strong growth in food delivery business (up 17% YoY/ 2% QoQ) followed by Quick commerce (blinkit) (up 120% YoY/ 27% QoQ) and Going out (up 191% YoY/ 35% QoQ ). Quick commerce business operating under the name Blinkit 
➡️Key operating metrics of all business segment helps in robust growth. In blinkit business 368 net new stores and also added 1.3 million sqft of warehousing space, account for 30% of overall warehousing space. This rapid expansion will take time to ramp up the business across all new store.
➡️Average monthly customer surged 9% YoY (+0% QoQ) to 20.5 Mn in Q3FY25 vs 20.7 Mn in Q2FY25 for food delivery business. While Quick commerce (blinkit business) customer base nearly double from 5.4 Mn in Q3FY24 to 10.6 Mn in Q3FY25 reflecting the change in buying pattern of consumer and habit for convenience buying.
➡️Quick commerce (blinkit business) order value double to 110.3 Mn in Q3FY25 from 5.8 Mn in same quarter previous year led by increase in Average order value and new customer base.

Profitability disappoint on higher depreciation; Quick commerce turn negative from break even
➡️Zomato’s food delivery business has maintained the overall profitability despite the loss in quick commerce business (blinkit). Overall EBITDA surged 218% YoY (-28% QoQ) to 162 Cr driven by strong growth in food delivey business and margin expansion (100 bps YoY). While quick commerce adjusted EBITDA at loss of 103 Cr from -89 Cr in Q3FY24. EBITDA margin has expand 100 bps YoY to 4.71%. led by all segment.
➡️Despite the robust growth in quick commerce GOV, margins are not improving due to the rapid infrastructure expansion.
➡️EBIT decline 10% YoY (-285% QoQ) to -85 Cr due to increment in depreciation by 93% YoY to 247 Cr.
➡️PAT down 57% YoY to 59 Cr due to the higher depreciation. PAT margin decline 300 bps YoY to 1%. While on QoQ basis PAT down 66% due to higher tax expenses and interest cost.

Years Q3FY25 Q3FY24 YoY (%) Q2FY25 QoQ (%)
Revenue  5,405 3,288 64% 4,799 13%
COGS 1500 782 92% 1334 12%
Employee cost 689 423 63% 590 17%
Advertisement & sales promotion 521 374 39% 421 24%
Delivery & related charges 1450 1068 36% 1,398 4%
Other expenses 1083 590 84% 830 30%
Total OpEx 3743 2455 52% 3239 16%
EBITDA 162 51 218% 226 -28%
EBITDA Margin% 3% 2% 93% 5% -36%
Depreciation 247 128 93% 180 37%
EBIT -85 -77 10% 46 -285%
EBIT Margin% -2% -2% -33% 1% -264%
Interest expenses 43 18 139% 30 43%
Other income 252 219 15% 221 14%
PBT  124 124 0% 237 -48%
Tax expenses 65 -14 -564% 61 7%
Tax rate % 52% -11% -564% 26% 104%
PAT 59 138 -57% 176 -66%
PAT Margin % 1% 4% -74% 4% -70%
EPS 0.07 0.16 -60% 0.20 -68%
No. of shares 906 857 6% 872 4%

Valuation and Key metrics
➡️Currently the stock is trading at a multiple of 309x 0.75 EPS at the CMP of 212 Rs. Company trading at 9.65x its book value of 22.1 per share. Trailing twelve months ROE and ROCE stood at 1.12% and 1.14% respectively. Interest coverage ratio stood at 7.45x signify strong solvency.

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Affordable housing to take a hit in the upcoming Budget

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Jio Financial Services Q3FY25 Result Update: Mixed Performance Amid Key Developments
Business, Equities, Markets, Research, Result Updates - January 20, 2025

Jio Financial Services Q3FY25 Result Update: Mixed Performance Amid Key Developments

Jio Financial Services Q3FY25 Result Update: Mixed Performance Amid Key Developments

Jio Financial Services Ltd (NSE Code: JIOFIN | BSE Code: 543940) reported a mixed performance in its Q3FY25 results. The company’s total income stood at ₹449 crore, reflecting an 8% year-on-year (YoY) increase but a 35% sequential decline. The growth was moderated by a 22% YoY decline in interest income from loans and investments, which was offset by an impressive 85% YoY surge in net gains from fair value changes.

Financial Highlights:
Pre-Provision Operating Profit (PPOP): PPOP grew 5% YoY to ₹330 crore, driven by higher employee costs (up 58% YoY) and increased operating expenses (up 20% YoY). However, on a quarter-on-quarter (QoQ) basis, PPOP declined by 40% due to the significant drop in total income.

Profit After Tax (PAT): PAT remained stable at ₹295 crore, with margins declining by 500 basis points YoY to 66%. The flat PAT was attributed to reduced contributions from associates and joint ventures.

Business Updates and Key Metrics:
Assets Under Management (AUM): The company’s AUM achieved a significant milestone, surging 248% QoQ to ₹4,199 crore from ₹1,206 crore in Q2FY25.

Payments Business: Jio Payments Bank (JPB) has grown its customer base to 1.89 million CASA accounts and expanded its business correspondent network to 7,300 BCs.

Asset Management Collaboration: The joint venture with BlackRock (50:50) filed for final approval to commence operations. Additionally, the company incorporated Jio BlackRock Investment Advisers Pvt. Ltd. in September 2024 to launch wealth management services.

Strategic Growth Outlook:
JFSL is well-positioned for robust growth, supported by its diversified product portfolio, digital-first approach, and strategic partnerships with industry leaders like BlackRock and Reliance. Key growth drivers include:

* Expansion in retail lending and corporate financing.
* Integration of tailored insurance products to cater to India’s growing demand for financial solutions.

Valuation Perspective:
Currently trading at a price-to-book value (P/Bv) of 1.28x, JFSL lags behind the sectoral average P/Bv of 1.81x. While the company reported lackluster growth in total income and flat PAT this quarter, its impressive AUM growth and upcoming asset management initiatives signal long-term growth potential.

Conclusion:
Although Q3FY25 results were underwhelming, JFSL’s strategic developments, particularly its venture with BlackRock, position it to capitalize on India’s evolving investment landscape. Investors should closely monitor the company’s progress in the asset management and wealth advisory segments for future growth opportunities.

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