Non-banking financial company (NBFC) Capital First has posted more than a three-fold surge in its consolidated net profit for the quarter ended September 30. V Vaidyanathan, executive chairman of Capital First, spoke to CNBC-TV18 about the earnings outlook and the company's business plans.
“Compared to June or April, I think incremental borrowing cost has gone up by about 100 basis points (bps). NCDs are distinctly costlier by about 100 bps, CP are up by about 125 bps and bank borrowing is expensive by about 75 bps,” Vaidyanathan said on Monday.
Talking about the growth in the micro, small and medium enterprises (MSME) space, Vaidyanathan said,“MSME segment constitutes about 56 percent of our loan book, consumption constitutes about 35 percent of the loan book and about 9-10 percent is corporate loans. We see strong growth in SME and the consumer side. On the corporate loan side, it is not something that we are growing but it is pretty flat."
“On real estate, we have been consistently bringing down our exposure in the last six years at a stretch. Our exposure to real estate is only Rs 480 crore on a loan book of about Rs 32,000 crore. Therefore, we do think that there is any impact in the real estate market because of liquidity constraints, I think we will be entirely unaffected by that,” said Vaidyanathan
With regards to concerns around sluggish incremental lending, Vaidyanathan said, “I have heard that across the industry, there is a slowdown in incremental lending because there is some uncertainly on the borrowing side. As far as Capital First is concerned, we have always guided for about 25 percent growth, I think this quarter is a little higher than that. I think very comfortably we can grow at more than 25 percent. Merger is around the corner, we are on a banking platform, so I see absolutely no reason for slowdown."
“There is a very important point here on non-banking financial companies (NBFCs) cycle that the asset side of most NBFCs have no problem or at least have a very limited problem if at all. So it is a question of how the liability side is placed or how they get the cash flow for that,” he said.