Highlights:

• The business sentiments remained subdued with problems in the auto sector focusing on reducing inventories and weak buying sentiments. However, the customers have shown willingness to discharge their liabilities which has supported collections and asset quality in Q3FY2020.
• The company is witnessing improved traction in the pre owned vehicle segment, which would contribute 15-20% of disbursements. In the tractor segment, the next season is expected to be much better with improved cash flows and reservoirs water storage level at strong level.
• The company proposes to continue focus on maintaining stable asset quality and tightening the processes.
• The company has made additional provisions of Rs 94 crore for customers paying longer than normal, while two one-off items amounted to Rs 30 crore on tax demand in Q3FY2020.
• Provisions stood at Rs 650 crore in 9MFY2020 and Rs 259 crore in Q3FY2020.
• There were no write-offs of loans in Q3FY2020.
• Opex to asset ratio to improve 50-60 bps in next 3 years driven by growth. It would continue to invest in technology.
• The company has exhibited improvement in margins mainly driven by continuous decline in cost of funds. The company is able to raise funds at very competitive rates.
• The company may increase securitization to 20% of liabilities mix on account of weak bond markets.
• Expects steady performance with some improvement in asset quality in Q4FY2020.
• States, the is witnessing good growth in UP, Bihar, MP and Gujarat, while Maharashtra and southern states are still slow.
• The company has launched 6-12 months tenor small-ticket loans to existing customers with good repayment record for requirements like education, health etc. Collateral is the vehicle, while the ticket size is Rs 50-70 thousand with yield of 18-20%.
• The housing finance subsidiary is witnessing early signs of improvement in asset quality, while expects asset quality issues to resolve in next two quarters. Geographic mix stands at 40-45% from Maharashtra, 20% from Tamil Nadu and another 7-8 states including Madhya Pradesh, Rajasthan and Gujarat, Andhra Pradesh 5-7% each. The company has recently entered Uttar Pradesh and Bihar.