Hero Fincorp Q3FY25 Result Update

07 February 2025

• Financial Performance (Q3 FY25 vs Q3 FY24): Hero FinCorp on standalone basis reported total revenue of ₹2,306 Cr in Q3 FY25, registering a 15.4% YoY growth from ₹1,998 Cr in Q3 FY24. This increase was driven by a rise in interest income and a gain on financial instruments. However, Profit Before Tax (PBT) declined significantly to ₹ (12) Cr from ₹286 Cr in Q3 FY24, mainly due to higher finance costs and impairment losses. Similarly, Profit After Tax (PAT) turned negative, recording a loss of ₹ (32) Cr, compared to a profit of ₹200 Cr in Q3 FY24. Earnings Per Share (EPS) for the quarter stood at ₹ (2.55) (basic and diluted), down from ₹15.74 in Q3 FY24.
  
  
• Nine-Months Performance (9M FY25 vs 9M FY24): For the nine-month period ended December 31, 2024, Hero FinCorp recorded a total revenue of ₹6,836 Cr, up 20.7% YoY from ₹5,677 Cr in 9M FY24. Despite revenue growth, PBT declined by 80.4% YoY to ₹140 Cr, compared to ₹712 Cr in 9M FY24, reflecting increased costs. Similarly, PAT came in at ₹34 Cr, dropping 92.9% YoY from ₹473 Cr in 9M FY24.
  
  
• Operational Metrics & Key Ratios (Q3 FY25 vs Q3 FY24): In Q3 FY25, Hero FinCorp's debt-to-equity ratio increased to 8.01x, up from 6.95x in Q3 FY24, reflecting higher leverage. The net profit margin turned negative at (1.41%), a sharp decline from 10.03% in the same period last year, indicating profitability challenges. On the liquidity front, the Liquidity Coverage Ratio (LCR) improved significantly to 261.98%, compared to 178.84% in Q3 FY24, highlighting a strong liquidity position. However, asset quality deteriorated, with Gross Non-Performing Assets (GNPA) rising to 5.36%, up from 4.74% last year, while Net NPA (NNPA) increased to 2.49%, compared to 2.30% in Q3 FY24. Despite this, the Provision Coverage Ratio (PCR) showed a slight improvement, reaching 55.02%, up from 52.62%, indicating a better buffer against potential credit losses.
  
  
• Growth Outlook: Hero FinCorp demonstrated decent  revenue growth, but profitability took a hit due to higher interest costs, impairment losses, and increased operating expenses. The rising NPA levels signal potential stress in asset quality, necessitating close monitoring and proactive risk management. Despite these challenges, the company maintains a strong liquidity position and healthy capital buffers, which provide resilience against market uncertainties. However, cost pressures and higher leverage could continue to weigh on profitability unless effectively managed in the coming quarters.