A key monitorable for me was their vehicle loan book which was grown at a rapid pace in FY18 and FY19. CV vehicle portfolio was 1’344 cr. in FY20 (out of total AUM of 25’225 cr.) Management had revealed that 10% (both by value and # of customers) of the book was under moratorium in last concall. This was in stark contrast to industry where other players had very high NPAs in their CV divison (eg: Shriram has 9-10% NPA; Bajaj finance has 50% vehicle book under moratorium as of Q1FY21). Management said that this quality is because they don’t lend to fleet operators, but mostly to individual truck owners. This was the exact management commentary last quarter:
As the management didn’t release NPA figures last quarter, it was very hard to evaluate the book quality. They finally reported NPA of 9.9% in FY21Q1 and 6.7% in FY20Q4 which is more in-line with industry standards. Also, their home loan book is not very clean, i.e. it has 5.1% GNPAs as of FY21Q1. However, management says that their more recent lending quality is much better (1.5% GNPA). The real lending quality will be known in a few quarters.
The saving grace is that gold prices have gone up leading to increase in gold AUM (although gold tonnage has been flat YOY). Company is very well capitalized and has raised lots of liquidity this quarter. Looking forward to reading the management trancript.
Disclosure: Invested (latest position size here)