SBI Cards, Motilal Oswal Financial Services Q4 Reviews: HDFC Securities

HDFC Securities Institutional Equities

SBI Cards and Payment Services Ltd. - SBI Cards reported earnings 17% above our estimates due to lower-than expected provisioning (3.3% net credit costs) as the stress pool continued to subside (gross stage-II/III at 8.5%/2.2%).

The business momentum continued to gain traction in terms of CIF (up 17% YoY), unit spends (up 32% YoY) and unit receivables (up 7% YoY) driving higher fee income (up 28% YoY). However, net interest margins remained under pressure at 13% (200 basis points below pre-Covid-19 levels) with a sub-optimal share of revolving loans at 25% (Q4 FY20: 40%).

Motilal Oswal Financial Services Ltd. - Motilal Oswal Financial Services printed pure broking revenue (including net interest income on the margin trading facility book) in line with the estimate, driving capital markets adjusted profit after tax to Rs 1.5 billion (down 11% QoQ).

The asset management company (excluding-wealth management) adjusted profit after tax beat was driven by strong traction from India Business Excellence Fund-IV in the private equity business; however, the portfolio management business continues to face redemptions.

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