Despite 22% Growth In Core Revenue, Forward Microfinance Registers More Than 100% Growth In Net Profit In Q2

Forward Microfinance Laghubitta Bittiya Sanstha Limited (FOWAD) published the second-quarter report of FY 2078/2079 with an increment in Net Profit by 103.58%. As per the report published by the company, the net profit increased to Rs. 45.80 crores as compared to Rs. 22.50 crores in the corresponding quarter of the previous year.

The massive increment in the Net profit is because the company didn't keep aside any provision this quarter which is also indicated by the decline in NPL to 2.11% from 4.96%.

The borrowings of the company increased by 18.38% to Rs. 10.38 Arba which was Rs. 8.77 Arba in the corresponding quarter of the previous year. At the same time, deposits increased by 18.47% to Rs 7.33 arba.

The company’s loans and advances have also increased by 39.53% to 19.62 Arba till this quarter.

The net interest income (core revenue) has increased by 22.73% to Rs. 73.82 crores compared to Rs. 60.15 crores in the corresponding quarter of the previous year.

The paid-up capital of the company stood at Rs. 62.55 crores till this quarter and its reserve and surplus stood at Rs. 1.71 Arba which is an increment of 55.87% in this quarter.

Its annualized earnings per share (EPS) stand at Rs. 146.47. The net worth per share is Rs. 374.82. The company traded at a P/E multiple of 14.92 times.

NOTE: Bonus shares of FY 2077/2078 is yet to be adjusted which impacts the Earnings per share and PE eventually. The reported EPS (Rs. 146.47) is higher because the company hasn't adjusted the increased shares after the 35% bonus dividend for FY 2077/78. This would have otherwise raised the number of shares (and the paid-up capital), which would result in a lower EPS.

This also means that an investor can't directly compare the EPS of two companies without consideration. Other companies have adjusted their bonus shares on the report already.

Click here for the Q2 report

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