NBFCs Q1 Earnings Preview – Healthy Disbursement Momentum; Steady Quarter Despite Seasonality: Motilal Oswal

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We expect our coverage universe of non banking financial companies – lending financials to deliver 26% /26%/175% YoY growth in net interest income/pre-provision operating profit/profit after tax, respectively, in Q1 FY23.

In general, Q1 of a fiscal year is a seasonally weak quarter both in terms of disbursements as well as asset quality. However, we expect Q1 FY23 to be slightly different with healthy disbursement momentum across both vehicle as well as housing financiers.

The deterioration in asset quality (typical of Q1) is also not as pronounced this time around with housing financiers likely to report a sequential improvement in asset quality while we expect a minor sequential asset quality deterioration (seasonal) for the vehicle financiers.

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