Disbursement is expected to show some improvement in Q4FY21: Yashpal Gupta, MD & CEO, Repco Home Finance

Yashpal Gupta, MD & CEO, Repco Home Finance, talks growth expectation in 2021, recoveries, demand pattern, disbursements and expansion plans among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: What are your expectations with the year 2021 and do you think that it is going to be a blockbuster year for your company?

A:  The year has started on a good note and I expect that in the next few months, the situation will improve further and there will be a significant increase in demand. Although it is a state subject, stamp duty was very high and has been brought down by many states. I expect that the central government should talk with remaining state governments and it make it the same across the board. If the stamp duty becomes 2%, then there will be a lot of growth, I feel that way. The second thing is about the tax exemption that is provided to the customers on interest and premium payment on the housing loan. I feel that the amount should be increased to about Rs 5 lakhs. Thirdly, the banks are growing because enough liquidity is available in the market. This is allowing the banks to grow a lot by offering the loans at a lower rate of interest, which is leading to 10% growth in the loan books of the bank and it is happening due to cheap loan. So, the government should do something on the front although it is good for the customers as he takes the loan at a low rate of interest this puts system stability at risk. If the government takes an action on these three factors, then I believe the ongoing boom in the housing finance sector will increase further.

सरकार के कदम और कम ब्याज दरों से कितनी बढ़ी है घरों की डिमांड? रेप्को होम का क्या है आउटलुक और आने वाले बजट से क्या है उम्मीदें? जानिए कंपनी के MD & CEO यशपाल गुप्ता से#BudgetOnZee @SwatiKJain @RepcoHome pic.twitter.com/Nx5EtIhXYY

— Zee Business (@ZeeBusiness) January 13, 2021

Q: How have the disbursements been this Quarter and what are your expectations disbursements to grow in 2021? Also, tell us the segments or pockets where maximum demand is visible?

A: As far as a disbursement is concerned, if I will talk about my company then we achieved the pre-COVID level in December and before that it stood at 80-90% level. As you know that the month of March, last year, was very bad for the business as COVID started in it. So, I feel, we will be able to do a little better in January and February and it will be much better in March. When it comes to headwinds, no doubt COVID has had an impact but genuine customers are reaching to us. Earlier, the customers used to have a look at 10 houses and talked about taking one of those but took his own time in making a decision. Now, they have started coming into the system. Due to this, it seems that they are coming into the system, builders have also reduced rates significantly and the low rate of interest is leading to significant growth.

Q: What about the recoveries that are visible in 2021? If we talk about the growth in terms of percentage than what are your expectations in FY22 in respect of top line, bottom line and margins?

A:  As far as our company is concerned, recovery has reached almost 100% level, i.e. it is around 97-98% and I believe that it will be at 100% by March 2021. Only old NPAs will be there but 100% recovery is being made in the new ones. When it comes to growth, then there will be 10-15% growth in disbursement but we are supposed to provide loan take over which reduces the book. So, it will remain at around 5-8%, the guidance that was provided at the start of the year. And next year, if the takeover comes down then it will be in the bracket of 12-15%. As far as margins are concerned, our margin has always been good and it stood at around 3% and NIM stood at 4.25% and we will be able to maintain it. In the context of profit, we made extra provisioning last year and made a profit of around Rs 280, which was almost 20% more compared to last year. Extra provisioning has been done this year as well and have kept some buffer due to which growth may not be seen this time but expect that we will be able to cross Rs 300 crore figure.

Q: Many housing financing companies are reducing home loan rates and PSU banks home loan rates are at a multi-decade low. How do you look at the competition going ahead and do you feel the interest rates might fall further in coming Quarters? Do you have any plans for increasing penetration and geographical reach in any specific areas or pockets?

A:  As far as interest rates are concerned, I think, competition is a good thing and fare competition should be there. But now, I feel, that the interest rates are at its low. In fact, the RBI in its last monetary policy said that inflation rates are going up but kept the rates low. Much liquidity is available in the market and the RBI Governor has recently said share market is quite bullish but the real economy is not performing and this is happening just due to the availability of liquidity. I feel, RBI will not reduce the rates further but liquidity may reduce due to which the rates can move up. Thus, the rates are not going to reduce and would either continue to be at the existing rates or go up. As far as our competition is concerned, if rates will increase then it will happen at our end also and if it reduces then it will happen here too. So, I don't think that it will impact us a lot but it may create pain to the customers, who have taken the loans at around 7% if the rates go up from these levels to around 9%. This would lead to an increase in NPAs therefore we have taken certain steps in respect to that and are very careful towards it. When it comes to geographical expansion, we had plans to increase our presence in the western and central part of India, largely in Gujarat, Rajasthan and Madhya Pradesh among others. We have paused the plan due to COVID and we are not going to open new branches in the next six months but are growing though the existing branches.