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NBFCs Q3 Earnings Preview - Business Growth Gaining Traction; Provisioning To Stay Elevated: Motilal Oswal

NBFCs Q3 Earnings Preview - Business Growth Gaining Traction; Provisioning To Stay Elevated: Motilal Oswal

A man hands over India rupee banknotes at a cash counter in Bengaluru, India. (Photographer: Dhiraj Singh/Bloomberg)  
A man hands over India rupee banknotes at a cash counter in Bengaluru, India. (Photographer: Dhiraj Singh/Bloomberg)  

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

Motilal Oswal Report

Disbursement momentum held up well in Q3 FY22 even as the economy grappled with fears of a third Covid-19 wave in the last two weeks of the quarter.

We expect most of the affordable housing and vehicle financiers to report a decent improvement in disbursement volumes in Q3 FY22 sequentially. Despite this, assets under management growth is likely to be muted for short-duration products such as vehicle loans as collections continued to improve in Q3 FY22.

For vehicle financiers, or micro finance institutions, we estimate collection efficiency in the 95-100% range. Collection efficiency levels seem to suggest that asset quality even in the restructured portfolios (wherever repayments resumed) has held up well until Q3 FY22.

Most companies appeared to suggest that they might build up management overlay provisions in Q3 FY22 (in light of Omicron-driven third pandemic wave) and that the write-offs/ repossession losses were rather rangebound during the quarter.

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Motilal Oswal NBFCs Q3FY22 Earnings Preview.pdf

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