Looking at double-digit margins next fiscal year, says Indostar Capital's R Sridhar

Indostar Capital reported its Q3FY21 earnings last week. R Sridhar, executive vice-Chairman and CEO at Indostar Capital Finance discussed the numbers.

“The yields are high and the cost of funds is coming down. With capital of 35 percent, we can look at near to double-digit net interest margins (NIMs) in the next financial year,” he said.

“With the recent announcement of scrappage policy in the Union Budget 2021, we are very excited and bullish about the prospects of the used commercial vehicle. So we have geared up, we have done all our work, we are planning for branch expansion, for geography expansion. All this is going to enhance our productivity and reduce the operating expenses.”

Company’s collection efficiency has been strong and the company has seen a significant pick-up in disbursals.

“During the lockdown and the moratorium period, we have been focusing on collections, that is the collection efficiency has improved. Till we collect 100 percent, we will not restart the disbursements. We achieved 100 percent collection in October and started disbursements from November. We are very confident that we will exceed the pre-COVID levels of Rs 600 crore of disbursements,” said Sridhar.

Assets under management (AUM) growth continues to be weak. “We are slowly winding down the corporate lending business and that is why the AUM is less,” he said.

“Because our base is very low, you will find huge growth in our AUM next financial year,” he added.