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DHFL Q2 results preview: Asset quality likely to remain stable

DHFL will be reporting its second-quarter earnings on Wednesday and the asset quality is largely expected to remain stable.

By Abhishek Kothari Nov 21, 2018 8:27:03 AM IST (Published)

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DHFL will be reporting its second-quarter earnings on Wednesday and the asset quality is largely expected to remain stable.

The stock has been a big loser in the non-banking financial companies (NBFCs) space, down about 61 percent from the start of this year. Here are the key expectations from the results.

The asset under management (AUM) growth, which was in 30-35 percent range, will come down to 20 percent given the fact that the last week of September or last 10 days of September – they had stopped disbursing loans, may put pressure on the AUM growth or the loan book growth.

The net interest margin (NIM), which was at 3.44 percent in the previous quarter, anything above 3.25 percent will be positive given the fact that the cost of funds have been rising for them.

The asset quality is largely expected to remain stable, gross non-performing assets (NPAs) in the previous quarter was at 0.93 percent, anything below 1 percent will be positive but what we will be watching is for the management commentary in terms of the cost structure and guidance – what has been the cost of funds from October-November onwards wherein they have redeemed a lot of commercial papers and that has come at elevated cost for across the players. So that will be seen very closely.

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