homereal estate NewsExpect AUM growth of 20% and profits to grow at 16 18% in FY21, says Indiabulls Housing Finance
Expect AUM growth of 20% and profits to grow at 16-18% in FY21, says Indiabulls Housing Finance
It's a weak show from Indiabulls Housing Finance in the third quarter as loan growth continues to slow down while non-performing assets (NPA's) rise. Gagan Banga, Vice Chairman & Managing Director of Indiabulls Housing Finance to talk about the earnings and their outlook on the road ahead
It was a weak show from Indiabulls Housing Finance in the third quarter as loan growth continued to slow down while non-performing assets (NPA's) rose.
Gagan Banga, Vice Chairman & Managing Director of Indiabulls Housing Finance talking about the declining trend of asset under management (AUM) said, “We have over the last 1-1.5 years been guiding that after about a decade of constant growth at a compound annual growth rate (CAGR) of 22 percent, we are sort of taking at pause, recalibrating the book to make it even more granular. So, by the end of fiscal 20, which is now two months away, the downward direction both for the AUM and the balancesheet will stop from the first quarter of FY21. The AUM will start growing yet again."
"For FY21, we expect that the AUM to grow in the around 20 percent and the profits to grow at a rate of about 16-18 percent," he said.
"Profits have sort of bottomed out from how we see things and how we see the various flows at about Rs 500 crore plus levels. We expect the profits to be hitting their base, which we have achieved in quarter three. Quarter one onwards the profits should also start rising at a CAGR of 16-18 percent,” he said.
Talking about NPAs he said, “We had opted for path, where we have said that over the last six quarters we would continue to decline the AUM because we have to rebalance them to make it more granular. As we do that, the denominator comes down and as a result that impacts the NPAs on a percentage basis."
"The real-estate sector also has its own struggles and we are not in that camp which believes in postponing recognition. Over the years, we have both provided proactively as well as recognized proactively and that's the path that we will continue to follow," he stated.
He said, the NPA's for them were within plus minus 50 basis points of the long- term range were we see both gross and net NPAs to be. "As I have maintained for last many quarters that while NPA's are there and if you have done loans to the real-estate sector or to any sector in the country and when the country is in a slowdown mode then there would be some loans which would go bad. However, the situation is not an alarming," he specified.
On budget announcements, he said, “The budget did not do much for the real-estate sector, while most of us were expecting a lot more. The honourable finance minister did speak about trying to infuse liquidity by expanding the scope of whatever measures that have been taken by the government. I think the stressed assets fund set up by the government has also started distributing money, so that should come as a big spate of relief for both home buyer as well as the stressed assets."
"Within all of this, I have maintained that companies such as ourselves should follow a path were we believe that financial prudence is the only way forward. We are on our own. We can't keep really looking over our shoulder for a support from central bank, the government or any other quarter,” he said.
Speaking about the liquidity scenario for HFCs and NBFCs, Banga said, “Liquidity has definitely normalised, the sector hit a low point sometime in September-October 2019, since then things have both on the basis of the confidence given by the government and the Reserve Bank of India (RBI) to the various banks and other lenders - banks are taking a very constructive view towards lending to the well-rated HFCs and NBFCs."
"We have been able to get fresh sanctions in the order of Rs 16,000 crore, which is on an absolute basis a very large number and as a percentage of our balance sheet works out to be roughly 20 percent of our borrowings," he said, adding that liquidity and incremental liquidity is pretty comfortable.
Talking about bond buybacks he said, “It has to be done both strategically as well as a little opportunistically, so we will continue to do so.”
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