Banks & NBFCs 4QFY21 Results Preview - HDFC Securities
Posted On:
Mr. Krishnan ASV, Institutional Research Analyst, HDFC Securities
Beyond a favourable base
We expect our coverage universe to clock a sequential PPOP growth of ~10% on the back of improving business traction. With the SC-imposed standstill on NPL recognition lifted, lenders should report a significant rise in slippages and GNPAs. We expect incremental provisions to moderate sequentially across our coverage universe, with lenders having built significant provision buffers during 9MFY21. We expect sequential improvement in business traction in line with rising economic activity.
Our FY22/23E estimates for our coverage remain relatively unchanged, despite the rapidly strengthening second wave of COVID-19 cases in India. This reflects our belief that our current estimates around credit growth and asset quality already factor in potential speed bumps on the path to recovery. Further, sustained fiscal and monetary policy support and the unexpectedly sharp (at the time) recovery in economic activity over 9MFY21 suggest that the potential fallout of slowing real economic activity on the financial system is unlikely to be material.