Vehicle finance sector to return to pre-Covid level by Q2 next fiscal: CIFC

Murugappa group's financial services unit says bad loans are down and it expects AUM to grow 25% this financial year

Cholamandalam Investment and Finance Company (CIFC), the Murugappa group’s financial services arm, expects the vehicle finance sector to be back to the level before Covid-19 by the second quarter of the next financial year.

The company projects its assets under management (AUM) to grow by 25 per cent in this financial year. It is betting on electric vehicles in the three-wheeler segment.

“We will certainly be back to pre-Covid levels during the Q1 or Q2 of the next financial year. Progressively, we have pushed down the NPAs (non-performing assets),” said Arul Selvan D, president and chief financial officer of CIFC, about the recovery in vehicle finance.

CIFC’s AUM stood at Rs 91,841 crore as of September 30, compared to Rs 75,063 crore at the end of the same month last financial year. “In AUM, we expect growth to be in the range of 20-25 per cent this year. New businesses, vehicle finance business, and commercial vehicles are coming back and will be the major drivers of this growth,” he said.

CIFC will focus on electric vehicles. “We have started to do some EVs. We are doing EVs on the three-wheeler side. We will continue to do that. We need to understand customer reaction with regards to EVs,” said Arul Selvan.

Though the company’s net profit during the second quarter of 2022-23 saw a dip of 7 per cent, it was mainly due to poor numbers during the first quarter of the previous financial year and the resultant rollback in Q2 last year.

CIFC’s total income increased by 22 per cent from Rs 2,481 crore during the second quarter of 2022-23 from Rs 3,038 crore during the same period last financial year. Aggregate disbursements in Q2 FY 23 were at Rs 14,623 crore as against Rs 8,706 crore during the same quarter in 2021-22, with a growth of 68 per cent. 

CIFC is among the non-banking finance firms (NBFC) that must follow stricter regulations set by the Reserve Bank of India. The RBI announced scale-based NBFC regulation in October 2021 and divided players into four categories.