The reaction to the results is extreme. The management revised the credit cost to 3% ± 0.15% from 2.5% earlier so even on the upper end of 3.15% credit cost for the FY, H2 should have a credit cost of 2.5%
I think the steady state pat per quater should be 800cr (similar to Q1) and if i add the 600cr hit in Q2 we should end this year with 2600cr implying a valuation of 14PE and next year if things normalize with a 15% growth we get 9 PE which is reasonable
2.5% credit cost seems conservative and i have a feeling that the management will start creating more provisions going forward. Once the earnings are predictable the valuations should improve as well.
One risk i see to earning is a delay in CGFMU payout which would force the bank to take the provisions from the PnL
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