Shriram Transport posted a weak set of earnings in the third quarter with disbursements at a two year low and loan growth at a six quarter low.
Throwing more light on the Q3 performance, Umesh Revankar, managing director of Shriram Transport said lending on new vehicles were restricted in Q3 due to lower margins in the segment.
However, sharing his outlook going forward, Revankar said things look better in Q4 as "demand is back and the liquidity situation is also comfortable". “Cash flows are good and we have additional cash on balance sheet. So we should be able to disburse normal in this quarter and the AUM growth for FY19 should be around 15-18 percent,” he said.
With regards to rural demand, he said barring central India, it is doing well. "Tractor demand in rural areas will likely pick up by March 2019," he said, adding that he does not see big challenge for growth in rural areas.
He said the incremental increase in cost of funds in Q3 was to the tune of 60 basis points, which they were able pass on the rise to customers and manage net interest margins.
Loan growth in FY20 is expected to be above 20 percent and capital would be required to fund this growth. Transition to Bharat stage-VI would push pre-buying demand and drive growth, said Revankar.
He said, the plan is to raise at least Rs 2,500 crore with 10 percent equity dilution.