A Part Exit By Warburg Pincus Will End Speculation, Says Capital First Chairman
Capital First’s affordable housing loan book doubles in FY17.
A part exit by Warburg Pincus will be positive for financial services company Capital First Ltd. as it will bring in new investors and end speculation, V Vaidyanathan, executive chairman of the company, told BloombergQuint.
His remarks came in response to reports that the private equity firm, which holds 61 percent stake in Capital First, is seeking to sell up to 10 percent.
I’d imagine that they would like to stay invested for a longer time. You know there is speculation that they are looking to sell 10 percent in the company. It is speculative, but in case any such a transaction happens, then it is actually good for the organisation, because newer investors will come and power the story for the next few years. I would take it as a positive because that kind of hangover (of an impending stake sale) will go.V Vaidyanathan, Executive Chairman, Capital First
Net profit for the non-banking financial company beat forecasts, rising nearly 50 percent to Rs 70.8 crore in the three months ended March, according to the company’s exchange filing. That compares with Rs 56 crore estimated by analysts tracked by Bloomberg.
Capital First posted a net interest margin of 7.8 percent on its assets under management. “We have the scope to expand the NIMs by 50-60 basis points,” Vaidyanathan said. A basis point is one hundredth of a percentage point.
“Assets under management have grown pretty well. Last year, our closing loan book was close to Rs 16,000 crore, and this year we are at around Rs 20,000 crore. Even though the book has grown by 25 percent, the profits have grown by 45 percent,” he said.
Total revenue from operations also jumped 34.2 percent to Rs 749 crore compared to the year-ago period.
Provisions for bad debt remained stable at Rs 126.3 crore compared to Rs 124 crore in the last quarter, the filing said.
Gross non-performing assets, which take into account repayments overdue for more than 120 days, have come down by 35 basis points to under 1 percent in the quarter ended March compared to a year ago, Vaidyanathan said. Net NPAs too have fallen by 50 basis points.
“We are highly diversified. We have exposure to over 600 industries, and don’t have exposure to any industry beyond 1.5 percent,” Vaidyanathan said.
The big growth for the company is coming from affordable housing, micro, small and medium enterprises and consumer loans. “Affordable housing book grew from Rs 400 crore to Rs 800 crore in the last financial year. We believe, we can double it again this year,” said Vaidyanathan.