Asset finance company, Magma Fincorp's consolidated net profits surged 70 per cent to Rs 45 crore for the quarter ended March 31, 2011, from Rs 26.5 crore in the corresponding period last year.

Disbursements during the quarter increased by 41 per cent to Rs 1,955 crore.

The board of directors has recommended a dividend of 30 per cent, or 60 paise per share having face value of Rs 2.

For the full year, Magma's consolidated net profit was Rs 122 crore (Rs 71 crore). This is the first time the company has registered net profit of over Rs 100 crore. During the fiscal, disbursements were up 33 per cent to Rs 5,415 crore.

Net interest margin was 5 per cent (5.1 per cent). Yield on advances fell to 13.2 per cent (13.8 per cent) and cost of funds also fell to 8.2 per cent (8.7 per cent).

Going ahead, the NBFC is targeting a 50 per cent growth in disbursements and NIM of 5.25 per cent, said Mr V. Lakshmi Narasimhan, Chief Financial Officer, Magma.

“We plan to increase the share of the higher yielding products like used commercial vehicles, tractor and SME loans to 25 per cent, from the current 19 per cent. This will help to protect the margins,” he said.

To tap market

Mr Sanjay Chamria, Vice-Chairman and Managing Director, said the NBFC may look to tap the equity market in the latter part of the fiscal, in order to meet its targeted growth. But the amount and the timing would depend on market conditions. It also has headroom to raise Rs 200 crore of Tier II capital, he added.

Capital adequacy ratio as on March 31, 2011, was 18.2 per cent (14.9 per cent).

Magma has received R1 licence for its general insurance joint venture with HDI Gerling, part of Talanx Group, of Germany. The company is looking to launch the business this fiscal, Mr Narasimhan said.

Shares of Magma Fincorp closed at Rs 70.05, down 0.14 per cent, from the previous close of Rs 70.15, on the BSE, on Tuesday.

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