Gruh Finance's show suggests valuations are sustainable

Almost zero bad loans, strong loan growth and return ratios are key positives

Against the backdrop of a subdued environment, Gruh Finance’s healthy performance in March quarter (Q4) stands out. On the back of strong growth in retail loans and robust asset quality, its earnings grew 26 per cent year over year to Rs 110 crore, way ahead of Bloomberg consensus estimate of Rs 101 crore. A closer look at the numbers reveals a sharp drop in its provisions and contingencies (for bad loans) - from Rs 6.1 crore a year ago period to Rs 1.35 crore. However, even if one were to consider analysts’ estimates for provisions at Rs 7-8 crore, the