Shriram Transport Finance expects AUM growth of 10-12% in FY22; sees rural demand uptick

The used vehicle market is underpenetrated. Assets under management (AUM) growth of 10 percent is something which the company eyes, which Revankar believes, will definitely be achieved.

“We feel that 10 percent AUM growth is something that will be reached – 10-12 percent or maybe a little better,” he mentioned.

Price hike by the original equipment manufacturers (OEMs) would definitely help the company in growing optically because the prices are better and the lending amount will be higher.

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“New vehicle price is going to have an impact on the used vehicle price. Any price rise is good for us because the ticket price goes up and underlying asset value goes up for us,” he stated.

“Even though the second wave of COVID-19 hit certain rural markets in the northern rural market, it did not impact the agricultural output. This time around the rains have been reasonably good, ground water levels are good and the storage is reasonably good, so it augurs well for the rural market. It is going to be sustainable, going forward and demand will be much better from both rural and urban market,” he shared.

The movement of goods vehicles were not disturbed during COVID-19 lockdowns. “The movement of the goods across the country was smooth and non-disturbed. Therefore, the earnings did not fall. The earnings of the passenger vehicles fell because of some curfews and restrictions on movement. The situation is better now,” he said.

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According to him, during COVID-19 time, people tried to keep the money with themselves to manage emergencies, which cannot be seen as defaults or delay in repayments. “It is going to be better than what it was in Q1FY22 and definitely we see this (gross NPA) coming down below 8 percent,” he said.

In terms of credit cost, he stated, “The credit cost which stands at 2.48 percent as on March 2021 will definitely be better in this year.”