Subhasri Sriram, ED & CFO, Shriram City Union Finance is confident of above 17 percent asset under management (AUM) growth in FY17 than FY16.
The stock is up 25 percent from January lows and 10 percent away from 52-week high. Over the weekend, Birla Sun Life Mutual Fund and SBI Mutual Fund bought 7.19 lakh and around 5 lakh shares in the company, respectively.
Talking about the business outlook going forward, she said, the non-south market is well established now; adding that the two-wheeler space in that market has contributed around 25 percent to the loan book. “Over the last 10-years we have built our presence in north and central India,” said Sriram.
She does not expect any major competition on the small finance banking front because the segment that they operate in is still very much under-banked and under-served.
Below is the transcript of Subhasri Sriram’s interview with Sonia Shenoy and Anuj Singhal on CNBC-TV18.
Sonia: Can you start off by telling us what the assets under management (AUM) growth could be for the company over the next one year or so? It has been quite tepid so far. Do you see the growth picking up?
A: Yes, we are getting better quarter-on-quarter and we definitely do expect to do better than last year. Our last year growth was about 17 percent. Our expectations look much doable, to do a much higher growth that what we did last year.
Anuj: What about the non-south market? How is that looking for you?
A: That is well-established now for us. In the two-wheeler space, I think that now contributes more than 25 percent of our book. So, we have over the last 10 years, gradually built our presence in the north and central India. We have a large working base and branches are well established. It is just a matter of time that we will putting in all our products in these branches.
Sonia: What kind of a margin pickup can we expect from here on for the company?
A: We are not looking at any dramatic reduction in interest rate, so the spreads and margins should only come in from getting better in terms of our cost of funds getting better. We do expect the RBI and the banks thereafter, to be able to offer a better rate than what they have done in the last year. While we continue to keep growing, we should get the benefit of scale. The team is well-established, I do not think we will be requiring a significant increase in headcount. And all of that should improve our return on assets (ROA).
Anuj: Any kind of organisational structure changes expected post the merger of Sriram City Union Finance and Sriram Transport Finance?
A: I do not know what merger you are talking about. So, the question of post the merger, I do not know.
Anuj: That is one word that there will be a restructuring and the two entities will be merged.
A: That will be a long term and if at all there is going to be one. So, right now I can answer your question saying that there is nothing right now in terms of immediately an organisation change. In due course, as and when the demand and requirement arises, there might be changes, but the other part of the question about merger or anything, nothing right now.
Sonia: A lot of companies are now getting the small finance bank licence. Do you expect any competition from that pocket?
A: Absolutely not. I will be very clear about that because the segment which we cater to are not anywhere close to the microfinance institutions who have converted in small finance banks. This segment will continue to be under-banked and underserved, therefore, we do not expect any such. If at all, there will be pressure from the small finance banks, it will only be on the liabilities side for the private sector banks and maybe to our extent, deposit accepting non-banking finance institutions (NBFC), there might be some pressure on the deposit market and we are more than happy to reduce the deposit exposure. From our 25 percent current, we do not mind getting it down to 10 percent which is probably good news for us.