Money & Banking

Sundaram Finance Q4 net profit rises to ₹209 crore

Our Bureau, Chennai | Updated on May 29, 2021

Rajiv Lochan, MD, Sundaram Finance

NBFC reduces its net NPAs to 1.35%

Sundaram Finance has managed to post an impressive result despite a challenging year 2020-21 which not only tested but also re-enforced its core belief of customer centricity.

For the fourth quarter of FY21, the non-banking financial company (NBFC) registered a net profit of ₹209 crore compared to ₹131 crore in the same period previous year. Its disbursements in Q4 saw an increase of 13 per cent to ₹3,305 crore.

Despite a washout in the first quarter and sluggish business in the second, the NBFC posted a 21 per cent growth in its net profit in FY21. Its profit stood at ₹809 crore (₹724 crore in FY20 which also included a one-time income of ₹53 crore). This performance came amidst lower disbursement which fell to ₹11,742 crore from ₹15,175 crore in FY20.

“We tightened our belt and focussed on our GQP (growth, quality and profitability) philosophy,” said Rajiv Lochan, MD, Sundaram Finance, explaining the performance. The overall asset under management in FY21 was ₹30,882 crore (₹29,936 crore), an increase of 3 per cent.

In spite of the Covid-related challenges, the company reduced its net NPAs to 1.35 per cent compared to 1.92 per cent in March’20. The capital adequacy ratio stood at 22.10 per cent (18.4 per cent).

Covid wave

But the second wave of coronavirus with its higher intensity and broader impact is creating fresh challenges to the company in FY22. “We are seeing slippages (in recovery) of 4-5 per cent,” says Lochan. But the company is working closely with its customers to address their pain points. In FY21, it took advantage of RBI’s moratorium and restructuring sops to restructure loans worth ₹1,307 crore accounting of 4.4 per cent of outstanding principle. “We will deploy the learnings from last wave and overcome the challenge,” he added.

Recovery to be delayed

Before the second wave struck, the NBFC was hoping for a recovery in demand by the second half of FY22. Now that will be delayed. It expects the demand for the tipper segment to remain strong thanks to government’s strong infrastructure focus. But the haulage segment, it believes, will not see a recovery before the fourth quarter of FY22. “A lot will depend on vaccination, recovery in rural economy and how we handle the Covid variants,” said Lochan.

Despite a washout in the first quarter and sluggish business in the second, the NBFC posted a 21 per cent growth in its net profit in FY21.

 

 

 

Published on May 28, 2021

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