HDFC Securities: Indostar Capital Finance’s Asset Quality Risks Remain Elevated
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HDFC Securities Report
Indostar Capital Finance Ltd.’s first quarter earnings came in above estimates due to lower-than expected operating and tax expenditure.
The company is now well-positioned on the liquidity, capital and funding fronts, as a result of the equity infusion by Brookfield Asset Management Company.
While the retail portfolio under moratorium registered a sharp fall, the corporate portfolio under moratorium was sticky, which would keep asset quality risks and provisions elevated and return ratios subdued in the near term.
Net interest income grew 10.4% QoQ to Rs 1.34 billion and was in line with estimates. Pre-provision operating profit, at Rs 737 million (down 38% YoY), was 14.7% ahead of estimates due to better-than-expected cost control. Profit after tax was 57% higher than estimates, as tax costs fell sharply.
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