ICICI Securities: Magma Fincorp Playing It Safe; Mending The Balance Sheet
An employee counts Indian rupee banknotes in Hyderabad, India. (Photographer: Dhiraj Singh/Bloomberg)

ICICI Securities: Magma Fincorp Playing It Safe; Mending The Balance Sheet

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Q1 FY21 was a quarter wherein Magma Fincorp Ltd. chose to play it safe. Reported disbursements plummeted 90% YoY despite improving collection efficiencies.

Over 60% of the Q1 disbursements were in affordable housing segment. Asset under management under moratorium declined to approximately 40% as at end-July and aggregate Covid-19 provisions stood at Rs 1.48 billion (approximately 93 basis points of AUM).

Magma Fincorp also rationalised its branch network, which makes us believe that some of the cost efficiencies delivered during the quarter are sustainable.

Various liquidity schemes (e.g. Targeted Long-Term Repo Operations, Partial Credit Guarantee Scheme 2.0, Special Liquidity Scheme) announced by the Reserve Bank of India and government have helped Magma raise fresh borrowings in FY21-TD.

We expect the company’s AUM to shrink in FY21 as it focuses on liquidity conservation and preservation of balance sheet. Asset quality could potentially deteriorate post moratorium with consequently high credit costs in the current fiscal.

Click on the attachment to read the full report:

ICICI Securities Magma Fincorp Q1Y21 Results Update.pdf


This report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.