In This Article:
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Disbursements: Up 25% quarter-on-quarter; 7% year-on-year increase.
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SME Disbursements: 60% year-on-year growth.
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Asset Quality (GS3): 3.9%, with a sequential increase of 10 bps.
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Net Interest Margin (NIM): 6.6%, with a 10 bps sequential gain.
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Profit After Tax (PAT): INR 899 crore.
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Tractor Business Growth: 24% increase.
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Passenger Vehicles Growth: 8% increase.
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Commercial Vehicles (CV) Business: 5% year-on-year decline, but 25% sequential growth.
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Provision Reduction: INR 434 crore due to LGD decline.
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Credit Cost Target: 1.3% to 1.5% for the full year.
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Branch Additions: 25 new branches in the last quarter, 34 year-to-date.
Release Date: January 28, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Disbursements increased by 25% quarter-on-quarter and 7% year-on-year, indicating strong growth momentum.
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SME disbursements saw a significant 60% year-on-year growth, showcasing successful diversification efforts.
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Net Interest Margins (NIMs) remained stable with a 10 basis points gain from the previous quarter, reaching 6.6%.
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The company secured an exclusive lending partnership with Mahindra & Mahindra for new electric vehicles, enhancing its strategic positioning in the EV market.
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The company has made significant strides in digital transformation, with 40% of applications moved to the cloud and increased use of AI for cross-sell, collections, and underwriting.
Negative Points
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Asset quality remains a concern with GS3 moving up sequentially by 10 basis points, indicating potential stress in the loan portfolio.
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The Commercial Vehicle (CV) business experienced a 5% year-on-year decline in disbursements, reflecting challenges in this segment.
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Provision coverage ratio (PCR) fell from 59% to 50%, raising concerns about future provisioning adequacy.
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The company faces challenges in maintaining growth in the Passenger Vehicle (PV) segment due to intense competition in the prime segment.
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There is a potential need for capital augmentation as Tier 1 capital levels approach lower thresholds, which could impact future financial flexibility.
Q & A Highlights
Q: Can you explain the benefit from the ECL model and if there is room for further provision releases? A: The benefit from the ECL model is fully baked in this quarter. The significant pool from June '21, which had a high collectability, has been included in the 42-month LGD pool, resulting in the provision release. Future provision levels will depend on PD and LGD, with the latter being influenced by collection efficiency.