Sustained improvement in asset quality trends is resulting in lower credit cost. Earnings were above estimates in Q1FY25 driven by lower credit cost resulting in RoA at 0.82%. Core credit cost stood at 41 bps annualised vs 85 bps q-o-q. Business momentum was also strong. Advances/ deposits grew by 5% q-o-q/ 3% q-o-q. However, PPoP growth was soft (10% y-o-y) mainly due to lower other income but Core PPoP was healthy, rising 17% y-o-y. The bank expects to achieve its RoA guidance of ~1% even before Q4FY25 as credit cost guidance has been revised to 0.5% of advances vs earlier of ~1% for FY25, which is a key positive.
OutlookStock trades at 1.1x/ 1.0x its FY2025E/FY2026E ABV. We maintain Buy with an unchanged PT of Rs. 140.
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