Abhimanyu Munjal-led NBFC Hero Fincorp has seen an 80 percent rise in loan write-offs in the first three quarters of FY25, which widened to Rs 2,180.9 crore from Rs 1,214.7 crore in the year-ago period, the company’s filings show.
The company sold off more than 2.95 lakh written-off loans worth Rs 1,874.73 crore for just Rs 49.85 crore.
Moneycontrol reported on April 8, 2024 that the lender wrote off loans worth Rs 1,214.7 crore in the first nine months of FY24.
Hero Fincorp’s assets under management stood at Rs 53,642 crore as on September 30, 2024, comprising personal loans (30.7 percent), 2-wheeler finance (16.9 percent), secured small and medium-sized enterprise (MSME) loans (12.9 percent), unsecured MSME loans (11.2 percent), corporate loans (9.7 percent), pre-owned car finance (7.3 percent), home loans (6.7 percent) and loan against property (LAP) and others (4.7 percent), a report by credit rating agency ICRA said.
The growing problem of bad loans has again seen the lender's gross non-performing assets (NPA) rise.
After hitting a peak of 7.9 percent in FY22 following the COVID-19 pandemic, when economic activity almost stood still, Hero Fincorp managed to bring down its gross NPAs to 5.38 in F23 and 4.26 the next year.
However, Hero Fincorp’s gross NPA stood at 5.36 percent as of December 31, 2024, despite writing off more bad loans, indicating that the portfolio has seen fresh slippages in recent quarters.
The slippages have weighed on the company’s profit. For the nine-month period, its profit after tax was Rs 299.35 crore, a drop of over 57 percent from the year-ago period.
An email sent to Hero Fincorp did not elicit a response at the time of publishing of this report. The story will be updated once comments are received from Hero Fincorp.
Hero Fincorp IPO
Higher write-offs and gross NPAs come when the ChrysCapital-backed NBFC is awaiting market regulator Securities and Exchange Board of India’s approval for an initial public offering (IPO), which will see the company raise Rs 3,668 crore.
While Hero Fincorp filed draft documents on July 31, it is yet to get SEBI’s nod.
The IPO includes a primary fundraise of Rs 2,100 crore, which the lender plans to use for the augmentation of its Tier–I Capital base to meet its future capital requirements towards onward lending.
Established in December 1991 as Hero Honda FinLease Ltd, the financial services arm of India's largest two-wheeler maker Hero MotoCorp is a diversified financial services company offering a range of financing solutions including two-wheeler financing, advances for buying homes in the affordable housing segment, loans for education, and lending to the small and medium enterprise sector.
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