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KRChoksey Research Report
Banks – The Reserve Bank of India in its recent meeting paused the rate hike cycle after increasing it by 250 basis points since May 22. The pause is on the back of moderating inflation (but still above the tolerance band set by RBI) and a comfortable level of economic growth expected by the RBI.
The RBI remains watchful on the global uncertainties and the economic activity indicators. Looking ahead, headline inflation is projected to moderate in FY24. Accordingly, the RBI has decided to keep the policy rate unchanged to assess the progress made so far, while closely monitoring the evolving inflation outlook. RBI will not hesitate to take further action as may be required in its future meetings.
We believe that banks under our coverage will continue to deliver strong earnings in Q4 FY23E, led by resilient business growth momentum and superior asset quality.
Asset Management Companies – The mutual funds continued to see higher outflows during the quarter, which has led to moderation in the industry’s overall growth. According to the AMFI data, the assets under management of the Indian Mutual Fund Industry, as of February 2023, stood at Rs 40.69 trillion, a growth of 5.5% YoY. The equity-oriented segment’s share in the overall mix will continue to be higher for Q4 FY23, with an ~37.3% contribution to the industry. For the companies under our coverage, we expect the AUM growth on a sequential basis to remain flat while growing at an average of 5.1% YoY in line with the industry growth.
Non banking financial companies – We continue to remain positive on the AUM growth trajectory of the NBFCs for Q4 FY23E. The disbursement growth for the quarter is expected to be robust for the companies, especially for the vehicle financiers. As of March 31, 2023, the provisional AUM and disbursement for most of the companies has seen a resilient growth.
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