November 16, 2016 / 12:46 IST
Capital First (CAFL) reported 40% YoY increase in PAT to Rs 576 mn driven by NII and securitization income. NIM (calculated) improved 174bps YoY to 9.2% (the highest ever) while AUM (Rs 179 bn) grew 32% YoY. GNPAs remained flat QoQ at 1%, though provisions more than doubled YoY, explained partially by enhanced provisioning in retail mortgages and home loans (Rs 30.7 mn); PCR at 54%.
CAFL will migrate to 90 dpd NPA recognition by next year, but already provides for NPAs on 90 dpd basis on key portfolios; hence, optical rise in GNPAs would not translate into higher credit costs. We reiterate our constructive stance on CAFL owing to better-than-expected AUM growth, robust business model, large opportunity, stringent risk framework and comfort afforded by parentage; Maintain BUY.
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