Non-banking finance company (NBFC) Muthoot Capital Services on October 23 reported a 34.6 percent fall in standalone net profit to Rs 14.02 crore for the second quarter of current financial year owing to higher interest costs and weak loan disbursals.
The NBFC disbursed loans for 11 percent lesser number of units in the July-September quarter. In terms of value, however, the loan disbursals stood at Rs 463 crore, as compared to Rs 469 crore in the same period last year.
While two-wheeler financing segment swa a fall, a higher loan-to-value ratio somewhat made up for the difference. The sales are likely to pick up in the second half of 2019-2020.
"We are seeing some improvement at the onset of festive season and fourth quarter is always better than rest of the year. We expect the second half to be significantly better than the first half," said Vinod Panicker, chief financial officer, Muthoot Capital Services.
He said that the interest costs for the NBFC has inflated by 100 basis points to 10.3 percent, after the IL&FS defaults led to a liquidity crunch for the sector last year.
The NBFC sold Rs 104 crore of two-wheeler loans via securitisation in the second quarter, as compared to Rs 197 crore raised through securitisation and direct assignment last year.
"Apart from securitisation, we secured additional funding of Rs 134 crore as bank loans in the second quarter," Panicker said, adding that the NBFC may also look at raising funds through non-convertible debentures (NCDs) up to Rs 200 crore in the fourth quarter.
In May, Muthoot Capital Services had said that it would raise up to Rs 400 crore via Qualified Institutional Placement (QIP) this year. However, it has shelved these plans, given the current market conditions.
According to latest data released by Federation of Automobile Dealers Associations (FADA), two-wheeler sales declined by 12.1 percent to 10,98,271 units in September as compared with 12,48,998 units in same period last year.
"Two-wheeler inventory, despite factoring in the oncoming festive season demand continues to be very high and is a very big cause of concern," the industry body said. The segment has been running an inventory of 60-65 days, as against the usual 35-40 days.
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