Hinduja Leyland Finance, the non-banking finance company of the Hinduja Group, foresees double-digit growth in vehicle finance and is betting big on the housing finance front as it is on a growth path, chief executive officer Sachin Pillai said. Edited excerpts:
Have you reached pre-COVID levels in disbursements?
In the asset classes, we have a presence, especially vehicle and housing finance. With the process of unlocking starting from June, we have seen sequential growth registering on a consistent basis.
On a YTD basis, obviously the de-growth is still significant. However, we have seen a good bounce back in terms of confidence on the ground September onwards. The gap is narrowing and with continuance of the same trend we might see pre-COVID disbursements back in the first quarter of the next financial year.
The mass passenger movement segment continues to be sluggish in line with the overall trend, and we do expect movement in this segment by the end of this quarter, especially with the vaccination drive in place and post that [when] relaxation of social distancing norms is expected.
In housing finance, the last quarter was the best in terms of disbursements. The trends are continuing since January as well… the business is on a high growth trajectory.
How was the performance for the last nine months?
Our books at the end of nine months remained at the same levels of March 20. Margins have been better largely on account of softening of cost of funds.
We have been able to drive operating efficiencies. Both put together have cushioned the effect of COVID provisions and enabled us to register growth of 10% in bottomline. While there is a standstill on NPAs on account of the Supreme Court order, on a proforma basis, NPAs have remained largely flat, with no restructuring done in the first nine months.
How do you hope to end the year and meet the target for FY22?
FY22 clearly seems to be a growth year. The economy is expected to grow in double digits, of course on a much lower current year base. We foresee a double-digit growth in disbursements in vehicle financing and housing finance businesses. Interest rates are expected to remain soft at least for a major part of the year and so will liquidity. We expect our books and profitability to grow by 20%.
What is the status of your IPO?
We are closely monitoring the market movements, especially NBFCs valuations. We will wait for the right window to emerge for considering listing.
How are you managing your fund position?
We are comfortable on liquidity with undrawn sanctions to the extent of four months of disbursements. Cost of funds have softened in this year by almost 50-75 bps. Our rating and outlook have remained unchanged during this period.
Any update on affordable housing subsidiary?
Affordable housing finance witnessed a faster bounce back among retail asset classes. Largely on account of this business being semi-urban/rural based, it was relatively unaffected as compared to urban cities as far as the pandemic is concerned.
For us, we have presence in more than 500 locations and in the current year, we initiated our focus in the low-income housing finance segment, which hitherto we were not active in. We now manage ₹2,190 crore of assets in this business.
Disbursements have grown at 21%, registering an overall book growth of 32% in the first nine months. We have registered a 62% growth in bottomline in the same period.
The softening of borrowing cost, along with entry into the low-income housing finance segment, augured well for an uptick in margins.
Operational efficiencies resulted in lower cost as well, cushioning the higher provision impact on account of COVID-related provisions. NPAs remain flat on a proforma basis.