The city-based affordable housing focused lender, which is one of the three credit business verticals of the Chennai-based Shriram Group, closed FY21 with a loan book of Rs 3,923 crore, which despite the pandemic washout has already crossed Rs 4,000 crore as of end-June.
This means the company plans to add more than 1.5 times of its present book over the next 30 months, managing director and chief executive Ravi Subramanian told in an interview.
According to the plan, the loan book should be touching Rs 5,000 crore by December and close the year at around Rs 5,600 crore, and reach Rs 8,000 crore in FY23 and top Rs 10,000 crore by FY24, said Subramanian who is also a fiction-writer.
The overall plan is to be amongst the top three affordable housing financiers, as already over 70 per cent of its book is in the affordable category, he said, adding the demand for housing is back and the overall tailwinds are positive now.
This year’s target is based on the optimism that there is no third wave of the pandemic, as the second wave has nearly washed out the first quarter, he admitted.
The disbursals are at 80 per cent levels now averaging Rs 170 crore, which used to be Rs 200-250 crore a month. We expect the monthly run-rate to touch Rs 300 crore from September provided there is no third wave and the vaccination pace increases, Subramanian said.
The company closed FY21 with Rs 62 crore profit, which Subramanian attributed to the low scale of its operations, but added that his mandate is to increase the scale, and keeping the cost lower.
Accordingly, expansion will be piggyriding the group companies–Shriram City Union Finance branches which has over 1,000 branches and also using the 2,500 branches of Shriram Transport Finance to co-locate their branches.
The first leg of such expansion will take place in Telangana and Andhra Pradesh, he said, adding the plan is to add 170 more branches this year in these two states. The second leg will focus on extending to Tamil Nadu, Karnataka, Rajasthan, Maharashtra and Gujarat he said without offering a number or time-line.
Last year, the company opened 26 branches co-located with Shriram City Union Finance branches in Telangana and Andhra, taking the overall footprint to 82 across 15 states.
The company will also hire around 200 to man the new branches coming up in Andhra and Telangana.
On the current business scenario, Subramanian said, while April and May were complete washout, both on sale and collection fronts, from June onwards both the numbers have inched back to the March level and July saw further uptick and now check-bounces are the lowest in the past 12 months–at 9.6 per cent in July from 12 per cent in June.
On the asset quality, he said delinquency level had risen in April and May but now is down, he said and hopes normalcy from September. The one DPD (day past due) loans are only 0.6 per cent now, he said.
Over 70 per cent of its Rs 3,929 crore loan book is affordable housing loans, but he said only around 30 per cent of those customers are eligible for the Rs 1.5 lakh interest subsidy from the Centre and Subramanian attributed the lower numbers to the fact of many customers somehow failing to meet eligibility criteria. Its average ticket size is under Rs 17 lakh only.
Of its current AUM, as much as Rs 2,950 crore were originated after 2019, thanks to the increased cross-selling, he said, adding they also limited themselves to better customers, but lowered the margins, which leading to lower profit.