Fedbank Financial Services (FEDFINA) Q2 23/24 earnings summary

Executive summary

• Q2 FY24 AUM was ₹100,304mn, up 38% YoY; disbursements reached ₹29,329mn, up 28% YoY.

• Q2 PAT was ₹5,776 lakh, up 25% YoY; annualized ROA was 2.4% and ROE 15.9%.

• Listed on NSE and BSE on November 30, 2023, following a ₹10.9bn IPO.

• Expanded into Uttarakhand; 23 branches opened in Q2, taking the network to 607 across 17 states and UTs.

Financial highlights

• Q2 income from operations was ₹3,980mn; net interest income was ₹2,073mn, up 29% YoY and 17% QoQ.

• Operating profit was ₹922mn, up 14% YoY; Q2 PAT was ₹5,776 lakh versus ₹4,616 lakh a year earlier.

• Q2 net gain on direct assignment was ₹182mn, versus ₹105mn in Q2 FY23 and ₹6mn in Q1 FY24.

• Q2 revenue from operations was ₹39,479 lakh, versus ₹28,464 lakh YoY; finance costs were ₹16,691 lakh and impairment expense ₹1,481 lakh.

• Q2 diluted EPS was ₹1.78 versus ₹1.43 YoY; H1 diluted EPS was ₹3.46 and was not annualised.

Outlook and guidance

• AUM growth target was 25%–30%; management described 25% as a comfortable guide against current 38% growth.

• ROA was expected to exceed 2.5%; management considered 2.5% a reasonable exit-FY estimate, supported by IPO capital and expense absorption.

• Operating leverage was expected to begin immediately; cost-to-income was 60.1% in Q2, with management expecting improvement from this level.

• Off-book AUM was 14.1% at September-end; co-lending and sell-downs were expected to lift the share by 4–5 percentage points.