Brookfield-backed IndoStar Capital Finance, which saw Deep Jaggi coming on board as chief executive officer (CEO), needs to grow its network to 700-800 branches in the following four-five years. The non-banking financial company (NBFC) hopes to develop loan book 4-5 times and furthermore enter financing of used cars and tractors as a of its medium-term technique. R Sridhar, chief vice-chairman, will surrender office on finishing a five-year term in April 2022. Jaggi joined the NBFC as chief business official in October 2020.
Jaggi said, in an analysts’ call, that the company is looking at 4-5 times growth in the medium term.
Private equity players like Brookfield and Everstone hold a majority stake in the company. Its stock closed higher by 5.9 per cent at Rs 252.3 per share on BSE.
In the current financial year (FY22), it plans to double the number of branches in the network. The bank had about 200 branches in March 2021 and aims to reach 400 branches by March 2022. It wants to increase penetration in tier II, III and IV cities to emerge as a pan-Indian finance company.
The focus of its business will now be on giving money for used vehicles and affordable housing finance. Now, 80 per cent of the CV portfolio comprises used vehicles. This line of activity has high net interest margins, said Jaggi.
Its assets, on a consolidated basis, stood at Rs 9,814 crore at the end of September 2021. Commercial vehicle (CV) finance portfolio was Rs 3,524 crore and SME finance was Rs 1,506 crore. Housing finance loan book was Rs 1,028 crore and corporate finance portfolio was Rs 1,646 crore.
Used vehicles’ business is an under-penetrated segment. Besides CV, IndoStar will add more products like funding of used cars and tractors.
The CV segment is showing a revival and freight rates for truckers have improved by 5-10 per cent in December. There is a rise in freight demand.
For affordable housing, it is looking at funding self-constructed units with a loan value of Rs 8-10 lakh.
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