PTC India Financial Services (PFS) posted mixed performance for Q1FY2019. Net interest income (NII) declined by 27.8% y-o-y to Rs. 98.6 crore, mainly impacted by margin contraction, but witnessed positive performance on the growth side. During the quarter, net interest margin (NIM) declined by 28 BPS q-o-q and 192 BPS y-o-y to 2.85%, while interest spread declined by 159 BPS y-o-y to 1.16%. Provisions for the quarter jumped by 20.2% y-o-y to Rs. 17.1 crore. Consequently, net profit for the quarter declined by 22.7% y-o-y to Rs. 55.9 crore.
OutlookThe stock currently trades at low valuation of 0.4x its FY2020E book value, reflecting concerns over asset quality going ahead as PFS has a considerable exposure to the power segment. We maintain our Hold rating on the stock with a price target (PT) of Rs. 21.
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