MMFS reports a net loss of INR15.3B V / s estimates of our pat from + INR2.9B. While operating profit fell 28% YoY to INR7.5B (31% MISS), higher credit costs than INR28.2B (EST. INR7B) drive Pat Miss. High credit costs are a function of advanced currents to the S2 / S3, higher provisions for restructured loans,
and additional Covid-19 provisions to strengthen the ECL overlay. NII fell 16% YoY / 25% Qoq, driven by: a) reversal of interest income in NPA, b) 6% yoy decrease in business assets, and c) some moderation in the loan results.
NIM (calculated) reached 8.04%, down 60BP YoY. The total credit costs reached 4.84% (non-annual). MMFS always shows the highest volatility in asset quality and related credit costs in the set of colleagues. In an unfavorable external environment,
the quality of its assets has shown vulnerabilities and has taken 12-18 months for some normal to return. At a low base, we cut the estimation sharply for FY22E into a factor in advance the supply fee. We maintain our purchase rating with TP INR175 per share (1.3x FY23E BVPs).
We remain conservative and cut our estimation sharply for FY22E into a factor in advance supporter costs. If there is no pain for gradual because Covid then we might also see a forward increase. While ROE is likely to remain calm at ~ 5% on FY22E, it must touch ~ 15% at FY23E. We maintain our purchase rating with TP INR175 per share (1.3x FY23E BVPs).
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