Muthoot Capital Services Limited (MCSL) Announces Steady Business

KOCHI:
Muthoot Capital Services Ltd (MCSL), the listed entity of Muthoot Pappachan Group (also known as Muthoot Blue), has announced financial results for the quarter ending December 31, 2019. Reinforcing its resilient stature as one of the fastest growing NBFCs in India, the company posted a net profit of INR 19 crores as against a net profit of INR 24.5 crores in the same quarter last year.

As per the unaudited financial results, as approved by the Board of Directors, the total income for the quarter under review touched INR 150.9 crores. The company disbursed two-wheeler loans amounting to INR 460.7 crores and had a total disbursement of INR 465.8 crores during the quarter.

The total AUM (Assets under Management) reached INR 2751 crores at the end of the quarter, including the assigned portfolio of INR 73.3 crores. For the same quarter last year, the company had a total disbursement of INR 502.1 crores and AUM at the end of same quarter last year was at INR 2593.6 crores. During the same quarter last year, the Company reported a total revenue of INR 135.2 crores.

Commenting on the results, Thomas George Muthoot, Managing Director, Muthoot Capital Services Ltd., said, “With fluctuating GDP growth, speculations on consumer demand and Government’s continuous push to boost liquidity, FY 2019-20 has been very dynamic so far, for the entire economy. While the auto industry is still reeling under severe slowdown, the market sentiments are expected to pick up in this year. The upcoming rabi season and gradual diminishing uncertainties around BS-VI norms should help in reversing the impact of the de-growth.

The cost of funds has remained stable, however, there is still much to be done to improve on credit from banks to
NBFCs. We, at MCSL, are happy with our profitability and steady state of the business and with the continuation of our planned spread into newer geographies. We have been cautious in our lending process and while growth opportunities existed due to many other lenders vacating the market, we have been careful to avoid bad portfolio and over-aggression in these testing times.”

Madhu Alexiouse, Chief Operating Officer, Muthoot Capital Services Ltd., said, “MCSL’s stability, amidst tough macro-economic conditions, stands testament to its robust business model and strong fundamentals. We are happy to have remained steady, not only in terms of business performance, but also in managing portfolio health.

“Our used-cars business has moved beyond locations in Kerala to major cities in Southern India and Mumbai. MCSL is now active in almost 17 locations and we expect significant contribution to the business starting from April 2020. We have covered about 17 locations across South and West regions and expect to add 3-4 more locations by March 2020. In addition to this, the pilot for one of our ambitious projects on consumer durables is being started in Kerala in February 2020, in a pilot form. The plan is to use the experience in the pilot stage to grow the volumes in the months to come.

“The Company is looking at extending its sourcing beyond the current 2 forms – Dealer Points and Muthoot Fincorp Branches – through various tie ups in the coming months. This will help growth in the volumes without increasing infrastructure and having a fixed cost on the same.

“With Budget 2020 approaching, we expect the Government to extend support to the auto industry including GST reduction on vehicle purchases and personal income taxes that would re-instigate consumer demand and bring overall stability. As part of the Muthoot Blue Group, MCSL would continue to focus on helping the common man acquire the wherewithal towards a better tomorrow.”

Talking about the outlook for the rest of the year, Vinod Panicker, Chief Financial Officer, Muthoot Capital Services Ltd., said, “The third quarter of this financial year was quite crucial for us especially because of the festive season. Although there was a spike in automobile sales during the festive season that raised hopes of an economic revival, the industry has witnessed the worst annual sales fall in over two decades.

“Based on the support that the Company has been receiving from its existing lenders and the new lenders who are coming in, the company has been able to keep good liquidity position and has not been negatively impacted by the downtrend in the NBFC space. Interest rates are seen softening and the current quarter financials inspite of current market conditions would only invite positive reaction from existing and new lenders. With things getting better the future will only be positive for the Company.

“Recently, we have completed a securitisation transaction of INR 145.37 crores on December 31, 2019 and with this, the company has raised total funds of INR 578.81 crores through securitisation and direct assignment transactions during the current fiscal. The recent transaction got a AAA rating from CRISIL based on the structuring done. Similar transactions are planned in the current quarter and the Company hopes to cross Rs 1000 crores+ of DA/Securitisation in the current financial year.”