Magma Fincorp stock jumps 10% after Q1FY21 PAT at Rs38cr

The company continued its focus on strengthening the balance sheet through superior management of collections, control on operating expenses and building strong provision buffers.

Aug 10, 2020 04:08 IST India Infoline News Service

Mumbai-based asset finance company, Magma Fincorp Limited announced results for Q1FY21. The assets under management (AUM) was flat at Rs15,922cr qoq on the back of the pandemic induced lockdown in the country during the quarter. The company posted a profit after tax (PAT) of Rs38cr yoy in Q1FY20 vs. Rs11cr in the same period last year.

The number of customers opting for moratorium 2.0 reduced to 45% in June 2020 and further to 40% in July 2020. The Company has taken a calibrated approach towards extending the second moratorium to its customers, after assessing customers’ cash flows etc.

The company continued its focus on strengthening the balance sheet through superior management of collections, control on operating expenses and building strong provision buffers.

The Company increased the additional provisions under the lockdown induced moratorium situation to Rs148cr, i.e., 0.9% of the AUM. Net NPAs have shown improvement to 3.7% vs. 4.2% qoq. The company exited June 2020 with comfortable liquidity of over Rs1,790cr.

The stock ended at Rs31.90, up by Rs2.9 or 10% from its previous closing of Rs29 on the BSE. The scrip opened at Rs31.50 and has touched a high and low of Rs31.90 and Rs30 respectively.

The company hasn’t opted for any moratorium from its lenders. The on-ground situation is gradually returning to normal with 94% of our branches now fully operational, and nearly 95% of employees are working in nearly a ‘Business as Usual’ environment.

Business highlights:
  • Vehicle Finance Business: The vehicle finance business portfolio is being reshaped by increasing the contribution of focus products and customer segments. The contribution to AUM of Used Assets increased to 25% in Q1FY21 vs 20% you.
  • SME Finance Business: Deploying the best of fintech capabilities, the SME business digitally accessed and disbursed 1,500 loans to SMEs amounting to Rs43cr with an end to end paperless and seamless process under the ECLGS (Emergency Credit Line Guarantee Scheme). The SME Business took long strides in working with the Ministry of MSME, SIDBI and NCTGC to give a fillip to the initiative of ECLGS under GOI’s “Atmanirbhar Bharat” scheme.
  • Magma Housing Finance (MHF): The 100% affordable housing finance subsidiary had a strong Q1FY21. MHF recorded PAT of Rs7.2cr as against Rs9.6cr in the same quarter last year. Women borrowers constitute 96% of the total loan originations, and 72% of loans have been disbursed in Tier 2 and Tier 3 towns.
  • Magma HDI General Insurance: The Company delivered PAT of Rs10.5cr with a Gross Written Premium of Rs240cr. Traction in Health business has been the highlight of the quarter. The investments in technology ensured that while working from home as an organization, more than 3000 intermediaries used our platform to issue policies and the touchless claim settlement increased from 13% in Q4FY20 to 49% in this quarter.
  • Commenting on Magma Fincorp’s performance, Sanjay Chamria, Vice Chairman and Managing Director, Magma Fincorp Limited said, “During these unprecedented times, Magma has taken a cautious approach and recommenced disbursements with tightened underwriting norms and focus on existing customers. To survive, revive and thrive, the company’s strategy for FY21 will be to focus on strengthening the balance sheet through superior management of collections, control on operating expenses and building strong provision buffers.”

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