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Healthy AUM growth; higher credit costs offset by lower opex

Earnings in line; CIFC launched gold loans business in select geographies

* CIFC’s 4QFY25 PAT grew ~20% YoY to INR12.7b (in line). FY25 PAT grew ~24% YoY to INR42.6b. NII grew ~30% YoY to ~INR30.6b (in line). Other income grew ~26% YoY to ~INR7b (~9% beat). This was primarily driven by an upfront assignment income of ~INR940m.

* Opex rose ~11% YoY to ~INR14.3b (~9% lower than MOFSLe) and the costincome ratio declined ~2pp QoQ to ~38% (PQ: 40% and PY: ~44% each). PPoP grew ~43% YoY to INR23.3b (~7% beat).

* Yields (calc.) declined ~15bp QoQ to ~14.5%, while CoF (calc.) declined ~20bp QoQ to ~7.9%. NIM was stable QoQ at ~6.8%.

* 4QFY25 credit costs stood at ~INR6.3b (vs. MOFSLe of INR5.2b). This translated into annualized credit costs of ~1.4% (PY: 0.5% and PQ: ~1.6%).

* CIFC announced the launch of the gold loan business across select geographies.

* The Board has declared a final dividend of INR0.7/share.

Healthy AUM growth of 27% YoY; VF disbursements grow ~11% YoY

* Business AUM grew 27% YoY/6% QoQ to INR1.85t, with newer businesses now forming ~13% of the AUM mix.

* Total disbursements in 4QFY25 grew ~7% YoY and ~2% QoQ to ~INR264b. Newer lines of businesses contributed ~17% to the disbursement mix (PQ: ~21% and PY: ~23%), due to the winding down of the CSEL business originated through partnerships. VF disbursements grew ~11% YoY

Asset quality deterioration in newer businesses; GS3 declines ~10bp QoQ

* GS3/NS3 improved ~10bp/9bp QoQ to 2.8%/1.55%, while PCR on S3 rose ~120bp QoQ to ~45.3%. ECL/EAD declined to 1.84% (PQ: ~1.86%). GS3 in newer businesses rose ~25bp QoQ to ~2.2% (PQ: 1.9% and PY: 1.1%).

* Stage 2 + Stage 3 (30+ dpd) declined ~30bp QoQ to ~5.3%. In 4QFY25, writeoffs stood at ~INR4.9b, translating into ~1.35% of TTM AUM (PY: ~1.4% and PQ: 1.3%).

* CRAR stood at ~19.75% (Tier 1: ~14.4%) as of Mar'25.

Valuation and view

* CIFC reported healthy loan growth, supported by strong performance in Home Loans and LAP. While overall asset quality showed slight improvement, newer business segments continued to exhibit deterioration. Additionally, NIM remained stable QoQ.

* Key monitorables include: 1) demand outlook for the vehicle finance segment, 2) growth outlook for personal loans (CSEL) and expectations on asset quality in this segment, and 3) the view on asset quality in vehicle finance and likely credit costs in this segment. We will revisit our estimates after the earnings call on 28th Apr’25.

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