M&M Fin Services Q2FY22: Expect low single-digit AUM growth, net NPA ratio of 4% by March, says management

“Going forward, as the inventory level starts to improve, we see that sentiments are very positive as the demand is high and we will at least reach a stage where AUM decline is reducing, and the disbursements are beginning to happen and this would correct over a period of time,” he assured.

He further said, “For the current year, there would not be substantial growth in AUM because only six months are left and there would be maturity happening but it would still be growth as compared to the degrowth that we have been seeing. It should be low single-digit because we are not yet sure about how the volumes are going to pan out during the year.”

“Improvement in asset quality going forward would be sustainable because rural in the second half is always better than the first half. As the harvest starts coming in, the festival spends could see consumption happening. All of this put together, we do believe that the worst probably is over unless there is any major disruption but we don't really forecast any. We are very confident that the improvement would be seen quarter after quarter,” mentioned Iyer.

He further said, “The restructuring programme is over by September and we have totally done about 1,04,000 accounts as against under the moratorium, where the number was 15 lakh customers. So, it is just about one lakh accounts, which is about 6 percent of the book.”

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“We have not given a rescheduling in terms of a longer period. Most of them have opted for three months kind of a moratorium break where they would pay a part instalment and then pay the normal dues. We do think that from January, we will start seeing recovery and there would be no further slippage,” said Iyer.

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“We are confident that by March 31, 2022, we would have a 4 percent net NPA ratio and we continue to believe that is the direction going forward,” he said.

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