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Business gains momentum for leading NBFCs in November

Leading non-banking finance companies have reported gaining traction with the bouncing back of the economy even as consumer demand is yet to recover to its potential.

Mahindra & Mahindra Financial Services said its loan disbursement rose 17% year-on-year to Rs 2,500 crore expecting the traction to continue in December.

Shriram City Union Finance, a Chennai-based leading two-wheeler financer, disbursed Rs 1022 crore to finance 1.6 lakhs two-wheelers in November, its highest ever in a month.

“The attractive financing offers during the festive season have stood out as one of the key drivers, with an additional push by the increase in people movement leading to elevated disbursements,” Shriram City Union said, even as two-wheeler sales dipped 27% month-on-month at 1.3 million on week rural demand and higher fuel prices denting the sentiments. The sales fell 28.4% year-on-year.

“We expect that the recent cut in fuel taxes, better personal mobility due to lower threat of the pandemic along with the progress in vaccinations will lead to an improvement in consumer sentiment in the two-wheeler market,” said Suman Chowdhury, chief analytical officer at Acuité Ratings & Research.

Analysts at IDBI Capital Markets & Securities expect recovery in two-wheeler sales only in FY23.

Shriram City Union however foresees a rise in the average loan ticket size with the increasing demand for electric vehicles, which are costlier than others.

The economic recovery has resulted in better loan repayment behaviour. Mahindra & Mahindra Financial Services said that its collection efficiency improved to 94% in November from 91% in October and from 84% a year back.

The Mahindra group company expects this positive trend to continue in December.

Bank credit growth also accelerated to 7.1% at the end of November 5, compared to what it was a year back, supporting the overall positive trend.

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