Highlights:

. The financial year 2018-19 witnessed high volatility in the industry owing to liquidity squeeze and increase in cost of funds from the banking and debt markets. NIMs was under pressure for the entire industry and is likely to stay that way for FY2020 as well.

. The company has been able to steer through liquidity crises quite well primarily because of its business model, both in the NBFCs and HFCs are focused on retail lending with average ticket size of Rs 4 to Rs 5 lakhs for ABF, Rs 9 to 10 lakhs for mortgage and Rs 18 to 20 lakhs for SME business.

. The company has a pan India position through 310-branch network across 21 states. Also, the company has a diversified product mix with no single product comprising more than 20% of the portfolio and robust track record of the securitization of over 230 individual pools for a total asset value of Rs 41500 crore over past 12 years with diverse investors comprising public sector banks, private sector banks, foreign banks and mutual funds.

. The company was able to raise additional adequate resources for disbursals to continue unhindered during the last seven months. The company exited FY2019 with a liquidity of over Rs 2000 crore and enough to meet all funding requirements for over two months without any additional funds raised and have also tightened internal ALM norms and will further improve during the year.

. The company has exhibited all round improvement in financial parameters. The disbursals of the company increased 20% to Rs 8757 crore. The AUM rose 8% Rs 17029 crore end March 2019. Segment wise disbursal growth for used assets was 28%, commercial vehicles 30%, mortgage 84%, and SME business 33%.

. Magma HDI has posted strong 83% growth in gross written premium to cross Rs 1000 crore, while the company served 1 million customers and was one of the best in the industry in servicing claims.

. The collection efficiency has exceeded 100% for second year consecutively during FY2019 and it has happened only second time in the history of the company.

. The company has achieved significant improvement in asset quality. GNPA has reduced to 4.8% from 8.6% and NNPA has reduced from 4.5% to 3.1%. The credit cost also declined from 2% in FY2018 to 1.6% in FY2019.

. Portfolio early warning indicators have fallen below the threshold parameters across products indicating robust quality of portfolio being currently underwritten.

. The company has been implementing credit rule engine for all product lines sequentially. The rule engine for vehicle finance was implemented last year. SME rule engine was launched last month in April 2019 and the mortgage rule engine is scheduled to go live in third quarter of this year.

. The implementation of the credit rule engine has led to uniformity in decision-making across 310 strong branch networks, substantial improvement in turnaround time for disbursal of a loan and has also led to the improvement in the asset quality.

. The company expects further improvement in the asset quality during FY2020 and further reduction in the credit cost from 1.6% in FY2019.

. The company has made remarkable progress in direct sourcing of business, with the direct business of vehicle finance division rising to 41% and of affordable housing finance to 78%. The company aims to embark on taking direct business ahead in SME and insurance businesses as well.

. In ABF business, the company has successfully increased the share of used assets from 18% in March 2017 to 28% in March 2019, while ABF disbursals grew by 10% in FY2019 with significantly higher disbursal growth in focused products at 28% for used assets and 30% for CVs. While the ABF AUM grew at 5%, the AUM used assets and CV grew by 34%. The aims to further improve the contribution of used assets in the overall portfolio leading to improved margins.

. In the mortgage business, its affordable housing finance subsidiary MHFL will leverage deeper extending presence through 140 branches including 40 micro markets and dig deeper in semi urban and rural markets of hinterland. The overall disbursals grew by 84% and AUM jumped 34% in FY2019.

. In SME business, the volume growth was strong at 33% in FY2019.

. NIMs continue to be healthy at 8.5% in FY2019 in spite of steep increase in cost of funds.

. The company is targeting 20% growth in the disbursals, while expects to accelerate AUM growth to 12%-13%.

. The company expects to reduce NNPA ratio below 1.5% by end FY2020

. The company expects to reduce credit cost below 1.5% to 1.3-1.4% in FY2020.

. The company expects 70 to 80 bps scope for improvement in opex to AUM over next two years from existing 4.2% to 3.5%.