Mumbai-based asset finance company, Magma Fincorp Limited today announced Q2FY20 results. Asset Liability Management and the Liquidity was top priority for the company over disbursement in Q2FY20. The company retired all outstanding commercial papers and replaced the same with better tenor matched instruments during the quarter. The company raised Rs. 2136 crs via term loan, direct assignment & pass through certificates and ended the quarter with over Rs 1900 crs of Liquidity.
The company sustained its operational performance in Q2FY20, posting profits of Rs 29.5 cr and Assets under management remained flat YoY at Rs 16,463 cr, due to the conscious slowing of disbursements to maintain adequate liquidity. Gross NPAs declined to 6.4% compared to 8.7% in Q2FY19. Liquidity coupled with replacing short term borrowing with better tenor borrowings led to an increase in cost of funds taking NIMs to 7.9%. The Company controlled its operating expenses at 4.1% vs 4.2% of Assets Under Management (AUM) on YoY basis. The company is further taking deep steps for absolute Opex reduction, which should be visible in ensuing quarters.
In the Vehicle Finance Business, the company's timely focus on used assets, insulated the business to a certain extent from the impact of the slowing new assets demand. In Q2FY20 used vehicles contributed 63% of disbursals and 31% of Vehicle Finance AUM.
Magma Housing Finance, the 100% affordable housing finance subsidiary had a robust quarter, posting 48% YoY growth in home loan disbursals in Q2FY20 and 27% YoY growth in the overall Affordable Housing Finance disbursals. The company has received its first sanction from National Housing Bank during the quarter.
Magma's SME Finance Business focused on quality originations with intensive emphasis on prudent portfolio quality over growth, given the macro-economic conditions which has led to stretched working capital cycle for the segment.
Magma HDI General Insurance, registered a growth of 45.2% YoY in Gross Direct Premium in Q2FY20 and 49.6% in H1FY20, driven by a continued momentum in retail and commercial business verticals. The company continues to enjoy one of the lowest Own Damage Loss ratios in the industry.
Commenting on Magma Fincorp's performance, Mr Sanjay Chamria, Vice Chairman and Managing Director, Magma Fincorp Limited said, "The Company chose to strengthen its liquidity and Asset Liability management at the cost of near term profitability. The company now has comfortable liquidity after retiring all short term liabilities and strong pipeline of funds from diversified lenders. The focus is now on profitable growth by regaining margins on the back of our stated strategy of increasing disbursement in our Used Assets, Mortgage and SME business."
Shares of MAGMA FINCORP LTD. was last trading in BSE at Rs.46.6 as compared to the previous close of Rs. 49.25. The total number of shares traded during the day was 14389 in over 158 trades.
The stock hit an intraday high of Rs. 50.85 and intraday low of 45.8. The net turnover during the day was Rs. 690642.