IndoStar to focus on SME lending, eyes Rs 1,200-cr loan book

With a CAGR of 49 per cent in assets growth, NBFC IndoStar Capital Finance is looking to ramp up SME lending this year and grow its loan book five-times to Rs 1,200 crore.

IndoStar Chief Executive and Managing Director Vimal Bhandari said,

We plan to ramp up our SME business this year and build an AUM of Rs 1,200 crore by geographical expansion. We closed the first year of the SME portfolio with as asset size of Rs 223 crore, with four branches. The key growth will remain the drivers that will direct business and digital strategy.

The company entered the SME sector in April 2015, with a focus on lending to businessmen and professionals like lawyers, architects, doctors and CAs. The lending, with a ticket size of Rs 50 lakh to Rs 5 crore and a tenure of 15 years, is secured by way of collateral and cash flows. It closed the fiscal with a loan book of Rs 223 crore.

The NBFC, launched in April 2011, is promoted by global investors including Goldman Sachs and Everstone Capital. Its loan book has grown to Rs 4,265 crore now, at a CAGR of 49 per cent, while its net profit clipped at 38 per cent during the same period. The company had closed its first year of operations with a loan book of Rs 873 crore.

For 2015-16, it reported a net profit of Rs 192 crore, up 29 per cent over Rs 149 crore in the previous fiscal. On the robust growth over the years, he said,

Our performance is catalysed by value-accretive mix of a diverse lending portfolio and we are governed by a conservative operating philosophy that keeps up the momentum in the bottom line. We have sustained the growth at robust levels over the years because of our focus on quality, rather than quantity of loans.

The NBFC has been maintaining a healthy asset quality and closed the year with a net NPA of just 0.2 per cent. For 2015-16, the unlisted company said its revenue increased 31 per cent to Rs 355 crore from Rs 270 crore in the previous fiscal and loans grew 24 per cent to Rs 4,265 crore from Rs 3,432 crore in the year-ago period.

Also read : Non-banking finance companies ramp up their reach to SMEs to fill the void

For this fiscal, he said with macro numbers showing healthy trend and new opportunities emerging in untapped terrains, the company looks forward to stepping up the growth momentum further.