Robust Revenue Growth:- The company clocked Year-on-Year (Y-o-Y) Revenue growth of 37.0% in FY23. The 5-year CAGR revenue growth of the company stands out at 33.4%
Healthy Net Interest Margins (NIMs):- Company clocked Y-o-Y margins of 38.3% in FY23. The 5-year CAGR of NIMs growth stands out at 33.1%
Volatility in Net Profit:- Company's profit has been showing a lot of volatility due to Provisions due to loan losses. In FY22 company recorded a net loss of Rs 192 Cr due to increase in Provisions of Loan Losses which showed a rise of 30.0% due to deterioration of asset quality of the company. In FY23, company recorded a net profit of Rs 480 Cr due to improved quality of Loans
Improved Asset Quality:- The Net Non-Performing Assets (NNPA) of the company has reduced from Rs 1,350.4 Cr in FY22 to Rs 1,024.6 Cr in FY23 showcasing improved quality of the assets
Backed by Legacy of Hero Group:- Hero MotoCorp Ltd. holds a significant chunk of 41.1% in Hero Fincorp
Investment Thesis:- As compared to its peers (Mahindra & Mahindra Financial Services Ltd, L&T Finance Holdings Ltd) the P/E multiple of Hero Fincorp is 36.6 the industry average of 18.9 and the P/B multiple is 3.5 vs the industry average of 1.7 at these multiples as of company is overvalued
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