Hinduja Leland Finance, a non-banking finance company of the Hinduja Group, attributes the double-digit growth in vehicle finance and is making big bets on the housing finance front as it is on a growth path, chief executive officer Sachin Pillai said. Edited excerpts:
Have you reached the pre-COVID level in disbursement?
In asset classes, we have a presence, particularly vehicles and housing finance. With the unlocking process beginning in June, we have seen gradual growth registering on a consistent basis.
On a YTD basis, obviously, de-growth is still important. However, we have seen good buoyancy in terms of confidence on the field after September. This gap is narrowing and we may see pre-COVID disbursement in the first quarter of the next financial year, continuing this trend.
The mass passenger movement segment remains sluggish according to the overall trend, and we expect movement in this segment by the end of this quarter, especially in place and post with vaccination drives. [when] Relaxation in social norms is expected.
In housing finance, the last quarter was the best in terms of disbursements. Trends have been on since January … business is on a high growth path.
How was the performance for the last nine months?
At the end of nine months, our books remained at the same level as March 20. The margin cost has been better due to softening of costs.
We are able to run the operating capacity. Together, the two have reduced the impact of COVID provisions and enabled us to register a 10% increase in bottomlines. While there is a stay on the NPA based on the Supreme Court order, on the basis of the proforma, the NPAs remain largely flat with no restructuring in the first nine months.
How do you expect to meet the end of the year and target for the fiscal year?
FY22 clearly seems to be a growth year. The economy is expected to grow in double digits, certainly on a current year basis. We expect a double-digit increase in disbursements in the vehicle financing and housing finance businesses. Interest rates are expected to remain soft for at least a major part of the year and hence there will be 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 the valuation of NBFCs. We will wait for the right window to emerge to consider the listing.
How are you managing your fund position?
We are comfortable with a four-month discount on liquidity with disbursement restrictions. This year the cost of funds has softened by about 50-75bps. Our ratings and outlook have remained unchanged during this period.
Any update on Affordable Housing Assistant?
Affordable housing finance saw a sharp boom among retail asset classes. Largely due to this business being semi-urban / rural based, it was relatively unaffected compared to urban cities as far as epidemics are concerned.
For us, we have a presence in over 500 locations and in the current year, we shifted our focus to the low-income housing finance segment, which we were not active in. We now manage assets worth 90 2,190 crores in this business.
Disbursements have increased to 21%, registering an overall book growth of 32% in the first 21 months. We have recorded a 62% increase in bottomline over the same period.
The softening of borrowing costs, along with the entry into the low-income housing finance segment, grew well due to a sharp rise in margins.
High provisioning effects were reduced due to lower costs in operating capacity as well as provisions related to COVID. The NPA remains flat on the basis of the proforma.