Hero Fincorp Limited, one of India's leading Non-Banking Financial Companies (NBFCs), has announced its financial results for the financial year 2022-23. The results indicate a solid recovery from the loss of INR 192 crore in the previous year, with the company reporting a net profit of INR 480 crore. Let's take a closer look at the company's FY23 results.

Net Interest Income (NII) and Total Revenue

Hero Fincorp reported a strong growth in its Net Interest Income (NII) for FY23, with the figure increasing by 38% YoY to INR 3,546 crore. This growth can be attributed to the company's focus on diversifying its loan portfolio, with a particular emphasis on secured lending. The company's Total Revenue also grew by a healthy 34% YoY to INR 6,448 crore. This was driven by the growth in the NII as well as an increase in the company's fee-based income.

Provisioning and Asset Quality

The company's provisioning decreased to INR 1,212 crore from the previous year, which is a positive sign for the company's asset quality. The company's Gross Non-Performing Assets (GNPAs) as a percentage of its total advances decreased to 5.11%, from 7.94% in the previous year. Similarly, the Net Non-Performing Assets (NNPAs) as a percentage of its total advances decreased to 2.69%, from 4.63% in the previous year. This indicates an improvement in the quality of the company's loan portfolio.

Capital Adequacy and Return on Assets (RoA)

Hero Fincorp's Capital Adequacy Ratio (CAR) increased to 23.2%, from 21.8% in the previous year. This indicates that the company has adequate capital to support its growth plans. Additionally, the company's Return on Assets (RoA) increased to 1.10%, from -0.5% in the previous year. This is a positive sign for the company's profitability.

Valuation

EPS of Hero Fin Corp in FY23 is 35 and Book value as on 31.03.2023 is 415 per share. So, at 1100 share price in unlisted market the P/E is 31x and P/B is 2.65x.

Conclusion

Overall, Hero Fincorp's FY23 results indicate a solid recovery from the loss of INR 192 crore in the previous year. The company's focus on diversifying its loan portfolio, with a particular emphasis on secured lending, has led to a healthy growth in its Net Interest Income (NII) and Total Revenue. Additionally, the decrease in provisioning and improvement in asset quality are positive signs for the company's future growth.

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