moneycontrol.com
Shriram City Union is confident of achieving 25 percent top line growth for next fiscal year. Managing director GS Sundararajan said that the company's net non performing assets (NPAs) are likely to remain in the range of 0.5 to 0.75 percent going ahead.
For this year, the company hopes to record marginal growth on top line. However, its profitability is likely to be robust courtesy healthy growth in retail and MSME segments. Lending to MSME accounts for 80 percent of its business.
Meanwhile, restrictions imposed by Reserve Bank of India (RBI) on import of gold, quantum of loan (LTV) that could be given against gold, took a toll on most NBFCs, which cater to this segment. Speaking on the issue, Sundararajan said these norms were necessary and have bought back sanity to this business. Gold loans accounts for about 20 percent of the company's book.
The company's Rs 200 crore non-convertible debentures (NCDs) will open for subscription on April 16 . The company aims to garner Rs 100 crore through NCDs with an option to retain over subscription to the extent of another Rs 100 crore, aggregating to a total of Rs 200 crore.
Shriram City Union Finance is a part of Shriram Group and offers finance for vehicles, personal loans, small business loans and loan against gold. The company's market capitalisation currently stands at Rs 8,797.80 crore.
Below is the verbatim transcript of GS Sundararajan's interview with Moneycontrol.com
Q: Do you expect cyclical pressure to reduce post elections given the hope that stalled projects will get faster clearance once the new government is in? How do you see the year FY15 panning out for the company?
A: It's quite certain that there will be a surge of clearances to spur economic activity if there is a stable and Progressive Govt post elections. It is however equally certain that we are not going to have a stable Govt that is also progressive. We have to wait and see what the immediate future holds for our economy.
As far as Shriram City is concerned, we are confident of making significant strides in sustaining our status as the largest MSME finance company in the country. We have a robust set of customer acquisition and credit appraisal engines that are together well-equipped to handle a 25 percent growth in the top line for next fiscal year.
Q: Can you bifurcate the contribution of vehicle finance, loans against property and gold loans to your total revenues? How are these segments expected to perform in FY15?
A: Predominant part of our portfolio caters to the MSME segment. Depending on the size of the loan that the customer is eligible for, we take the collateral security which could be a used car, machinery or real estate. Gold accounts for about 20 percent of our book whereas MSME accounts for the majority of the balance 80 percent with various types of collateral depending in the credit eligibility of our customer.
Q: The gold lending business of many NBFCs has taken a hit of late given the restrictions imposed by the government on import of gold, quantum of loan (LTV) that could be given against gold. How is Shriram City Union coping with it?
A: Gold is a great business to do in many parts of India given the nature of collateral and the savings and sentimental value attached to this commodity by the Indian aam aadmi. Specific regulations by the RBI were necessitated due to the irrational exuberance demonstrated by some players. In fact these regulations have brought back the much needed sanity to this business and thanks to RBI and gold financing is now once again become the safe business it always was. Shriram City continues to have gold financing as one of its product lines that is profitable and caters to the basic needs of our target market.
Shriram City stock price
On April 01, 2014, Shriram City Union Finance closed at Rs 1120.85, up Rs 19.40, or 1.76 percent. The 52-week high of the share was Rs 1230.00 and the 52-week low was Rs 850.05.
The company's trailing 12-month (TTM) EPS was at Rs 58.14 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 19.28. The latest book value of the company is Rs 260.74 per share. At current value, the price-to-book value of the company is 4.30.
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