Shriram City Union Financeis up in share price after it delivered both revenue and net profits YoY in its third quarter results. The quarter, the company said, was "stable in terms of delinquency and on the disbursement side," according to management, The company saw the highest ever quarter in terms of disbursement of 2-wheelers.Shriram City said that the company did close to Rs1,887 crores of 2-wheeler disbursement for approximately 360,000 2-wheelers, compared to 210,000 same period last year.
The company also disbursed Rs 400 crores to preowned 2-wheeler segment, a new line. The preowned 2-wheeler business is currently clubbed in the personal loan and auto loan business. The pure auto loan business fell, with only a disbursement of only about of INR 5 crores in the auto loan business.
Shift away from unsecured loans
As management policy, the firm has decided to move out of the unsecured business and focus on the secured business for personal and other loans. This resulted in a fall of close to 25% of disbursement in unsecured loans, and a sharp fall in personal loans. Personal loan was approximately Rs 700 crores in Q2, and in Q3 this fell to Rs. 185 crores. The company noted that they see credit quality improving going forward into the next quarter.
The business allocated more funds to the 2-wheeler sector due to the shift towards secured loans and high demand during the October and November months. On a year-on-year basis this resulted in close to Rs 850 crores increase for this sector, and a Rs 600 crores QoQ. Shriram City has increased its cash and signed limits to approximately Rs 1,500 crores.
Management stated during the Earnings Call that liquidity has improved overall. During the quarter, Shriram City Union raised Rs 2,200 crores. And in the month of January, the business Rs 450 crores through the PCG route from State Bank of India.