Magma Fincorp is betting on high- yield products to fuel growth of its asset financing business in future, a top company official said.
"We are targeting the high-yield products in our portfolio," chief operating officer of Magma Fincorp Ashutosh Shukla told a group of visiting journalists here.
Shukla said that based on the net internal rate of returns (IRR), tractor financing was the most profitable business at 21.5 per cent, followed by used commercial vehicles at 19.7 per cent and SME loans at 17 per cent.
He said total disbursements towards these sectors were meagre at Rs 514 crore out of total of Rs 4,559 crore.
Shukla said that the company was targeting that disbursements to these three sectors to be around 20 per cent of the total during the current financial year.
He said that going by the present trends, Magma was expecting a disbursement growth of 25 per cent in the current financial year.
Shukla said that the company was also targeting a net interest margin of 5.5 per cent in the current fiscal. In the last fiscal, the NIM stood at 5.1 per cent, he said.
To a query, he said that there were no plans to exit from low-yield products in the portfolio of businesses.
Shukla said that Magma getting into financial inclusion was high on the agenda.
He said that 75 per cent of the company's branches were located in rural and semi-urban areas, while the rest were in the urban regions.
"We are planning to open 30 more branches in the current fiscal," he said.
Magma currently operates through 166 branches in 22 states across the country.
The company is also engaged in financing construction equipment, commercial vehicles and cars.
Shukla said that between FY 2005 and FY 2010, the company had clocked a CAGR of 27 per cent.
At the end of FY10, assets under management (AUM) stood at Rs 9,481 crore, with total income at Rs 723 crore and net profit at Rs 71 crore.
At present, 30 per cent of the total disbursements were towards the commercial vehicles sector followed by construction equipment at 24 per cent.
