Improvement in yield, cost control boost margins
3QFY25 operating revenue grew 39% YoY/5% QoQ to INR9.3b (in line with est.). The sequential growth was driven by AUM growth and a 0.7bp QoQ improvement in yield to 47.5bp (1.1bp YoY decline). For 9MFY25, operating revenue grew 37% YoY to INR26b.
Total opex grew 7% YoY to INR1.7b (10% lower than est.), driven by 6% YoY growth in employee costs (2% lower than est.) and 8% YoY growth in other expenses (19% lower than est.).
Better-than-expected operational efficiency resulted in 49% YoY growth in EBIDTA to INR7.6b (6% beat). EBIDTA margin came in at 81.7% vs. 79.3% in 2QFY25 and 76.2% in 3QFY24.
Operational efficiency resulted in 31% YoY/11% QoQ growth in PAT to INR6.4b (6% beat). For 9MFY25, PAT grew 30% YoY to INR18.2b.
The management guides to improve its market share and become the leader in the existing product offerings rather than focusing on bringing more new products to the bouquet. Additionally, expenses are expected to grow in the range of 12-15% YoY.
We have largely kept our estimates unchanged. We maintain our BUY rating on the stock with a TP of INR5,200 (premised on 42x Sep’26E Core EPS).
Valuation and view
The increasing share of equity in the overall AUM, driven by an anticipated higher CAGR of 30% in equity AUM vs. overall AUM CAGR of 24%, will help to mitigate the potential decline in yields. We expect scale benefits from new businesses (Alternates & Passives) to translate into higher profitability.
We have largely kept our estimates unchanged. We maintain our BUY rating on the stock with a TP of INR5,200 (premised on 42x Sep’26E Core EPS).
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