Robust growth in two-wheeler loans and improved geographical spread of business enabled Muthoot Capital Services achieve a 30 per cent growth in net profit to ₹8.06 crore in the second quarter of this fiscal (FY17).
Net profit in the corresponding quarter last year was ₹6.18 crore.
Total income in the quarter rose 24 per cent to ₹70.08 crore (from ₹56.50 crore in the year-ago period).
The company disbursed two-wheeler loans worth ₹106 crore in September, crossing the ₹100-crore mark in a single month for the first time. The total assets under management, including the managed portfolio of ₹88 crore, touched ₹1,170 crore at the end of the quarter.
On sequential basis, non-performing assets (NPAs) during the quarter fell to ₹66.67 crore (5.7 per cent of total AUM) from ₹69.37 crore as on June 30.
In the first half ended September, the company’s net profit rose 26 per cent to ₹12.54 crore (from ₹9.93 crore in the first half of FY16).
According to Thomas George Muthoot, Managing Director, Muthoot Capital Services, the promising macro indicators and overall improvement in sentiments that triggered higher rural demand contributed to the good performance.
Festival sales
The robust festival sales during Onam in Kerala, the company’s core market, was another factor for the growth, and the company expects a similar experience in the North during Diwali.
R Manomohanan, the company’s CEO, said that the actual gains from the markets in the North and West Bengal will be reflected only in the second half of this fiscal.
The company is also looking at additional sources of funding, including through non-convertible debentures (NCDs) and via more securitisation transactions.
During the quarter, it closed a securitisation transaction wherein loans amounting to ₹111 crore were sold to a special purpose vehicle (SPV), enabling it to issue pass through certificates (PTCs) amounting to ₹104 crore, which were purchased by investors.
This enabled the company to lower the cost of funds and improve its capital adequacy ratio.